Q: I own Pet Value and am down 30%. The company's financials indicate continuing growth and it seems well managed. Is this a buying opportunity or a hold. Your opinion please. Thanks. Gerry
5i Research Answer:
PET’s growth has slowed down meaningfully in recent quarters to low single-digits, compared to previous years of double-digit growth. PET’s same-store-sale growth was nil in the most recent quarter. PET’s slowdown in growth concerns investors and this concern is magnified by a leveraged balance sheet. PET is trading at 15.6x Forward P/E, which is quite attractive, however, we think the name would look better if management can demonstrate to reaccelerate growth or an announcement of a buyback. Other than that, we think buyers can wait and we would consider it a HOLD.