Pets at Home (PETS) AI Stock Analysis

• Market Cap: £1.10B
• Dividend Yield: 5.49%
• Average Volume (3M): 1.40M
• Price to Earnings (P/E): 12.6
• Beta (1Y): 1.30
• Revenue Growth: 2.78%
• EPS Growth: 11.20%
• Country: UK
• Employees: 12,031
• Sector: Consumer Cyclical
• Sector Strength: 63
• Industry: Specialty Retail
• EPS (TTM): 0.19
• Shares Outstanding: 459,491,060
• 10 Day Avg. Volume: 983,104
• 30 Day Avg. Volume: 1,401,103
• PEG Ratio: 1.12
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £268.33
• Price Target Upside: 10.70% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

Pets at Home demonstrates strong financial health with stable revenue growth and a solid balance sheet, though profitability and cash flow generation face some pressure. Technical indicators suggest positive momentum, although there may be short-term overbought conditions. An attractive valuation with a low P/E ratio and high dividend yield enhances its investment case.

Positive Factors

Future Growth Potential

PETS is expected to be a consistent grower and a strong cash generator in the longer term.

Investment Impact

There are undoubtedly some positives to be seen in the completion of major investments, that should begin to contribute meaningfully to growth, and the continued strong progress in the Vet operation.

Stability and Resilience

The measures released by the CMA are consistent with expectations, suggesting stability for Pets at Home.

Negative Factors

Earnings Downgrade

The FY26e PBT estimate is lowered by -16%, which is disappointing.

Market Performance

PETS' disappointing H1 has seen the shares fall -16%, with soft Retail LFLs catalysing downgrades.

Retail Challenges

The Retail business faces into an 'uncertain backdrop for demand and inflation' and, alongside significant external cost headwinds, this will result in Retail PBT declining YoY.

Pets at Home Business Overview & Revenue Model

Company Description

Pets at Home (PETS) is a leading pet care business in the United Kingdom, offering a comprehensive range of products and services for pets and their owners. The company operates through a variety of sectors including retail, veterinary, and grooming services. Pets at Home provides a wide assortment of pet food, accessories, and supplies, alongside professional grooming and veterinary services through its in-store and standalone locations.

How the Company Makes Money

Pets at Home generates revenue primarily through its retail operations, which include the sale of pet food, accessories, and supplies across its extensive network of stores and online platform. In addition to product sales, the company earns money from its veterinary services, provided through a network of in-store veterinary practices and standalone veterinary surgeries. These services are offered under various brand names, contributing significantly to the company's earnings. Furthermore, Pets at Home benefits from its grooming services, offering professional grooming and spa treatments for pets. The company also engages in strategic partnerships and collaborations that enhance its product and service offerings, thereby expanding its customer base and revenue potential.

Pets at Home Financial Statement Overview

Summary

Pets at Home demonstrates stable revenue growth and strong profit margins, although there are pressures on profitability with declining net profit and EBIT margins. The balance sheet remains solid with low leverage and strong equity, but cash flow generation could be improved.

Income Statement

Pets at Home shows a stable revenue growth with a revenue increase of 5.16% year-over-year from 2023 to 2024. The gross profit margin stands at 46.82%, indicating strong cost management. However, the net profit margin has decreased to 5.36% this year from 7.17% the previous year, suggesting pressure on the bottom line. EBIT and EBITDA margins are healthy at 8.26% and 15.45%, respectively, but have declined compared to last year, signaling some operational challenges.

Balance Sheet

The company maintains a solid equity base with an equity ratio of 58.69%, showcasing financial stability. The debt-to-equity ratio is 0.43, reflecting a conservative leverage strategy. Return on equity stands at 8.01%, though it has decreased from last year's 9.82%, indicating a need for improved profitability.

Cash Flow

Operating cash flow is robust at £210 million, though it has decreased from the previous year's £251.2 million. The free cash flow to net income ratio is healthy, indicating efficient cash generation relative to net earnings. However, the free cash flow growth rate is negative at -6.96%, reflecting challenges in maintaining cash generation levels.

Breakdown
Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
1.48B	1.40B	1.32B	1.14B	1.06B
	Gross Profit
691.30M	668.30M	648.00M	559.40M	511.30M
	EBIT
122.00M	136.80M	163.80M	134.80M	103.70M
	EBITDA
228.10M	241.80M	267.90M	230.40M	213.60M
	Net Income Common Stockholders
79.20M	100.70M	124.50M	90.40M	67.40M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
57.10M	178.00M	166.00M	101.40M	79.10M
	Total Assets
1.68B	1.85B	1.77B	1.72B	1.77B
	Total Debt
426.30M	541.90M	479.90M	508.40M	627.40M
	Net Debt
369.20M	363.90M	313.90M	407.00M	548.30M
	Total Liabilities
695.30M	824.30M	717.90M	730.30M	837.90M
	Stockholders Equity
988.50M	1.03B	1.05B	993.70M	931.00M
Cash Flow		Free Cash Flow
161.50M	173.60M	192.30M	159.80M	175.60M
	Operating Cash Flow
210.00M	251.20M	248.10M	195.10M	215.20M
	Investing Cash Flow
-48.30M	-75.00M	-37.10M	27.90M	-50.30M
	Financing Cash Flow
-282.60M	-164.20M	-146.40M	-200.70M	-146.30M

Pets at Home Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 242.40
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:PETS, the sentiment is Positive. The current price of 242.4 is above the 20-day moving average (MA) of 228.16, above the 50-day MA of 231.34, and below the 200-day MA of 256.23, indicating a neutral trend. The MACD of 2.00 indicates Negative momentum. The RSI at 62.67 is Neutral, neither overbought nor oversold. The STOCH value of 72.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:PETS.

Pets at Home Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PETS	78 Outperform	£1.10B	12.59	9.37%	5.49%	2.78%	11.20%
CARD	76 Outperform	£341.76M	8.29	13.65%	6.04%	7.75%	-21.78%
BME	70 Outperform	£3.45B	10.56	42.42%	4.43%	6.82%	-8.24%
SMWH	64 Neutral	£1.17B	17.75	2.46%	3.71%	4.46%	-89.55%
BWY	64 Neutral	£3.27B	22.23	4.22%	2.01%	-11.63%	-31.81%
Sector *	61 Neutral	$6.55B	11.72	3.07%	4.01%	2.66%	-21.27%

Pets at Home Corporate Events

Pets at Home Reports FY25 Results and Outlines FY26 Strategy

Pets at Home Group Plc announced its FY25 pre-close statement, reporting an expected underlying profit before tax of £133m, aligning with previous guidance. The company has completed significant strategic initiatives, including the transition of online sales to a single distribution center and the launch of a new digital platform, setting the stage for potential sales growth in FY26. Despite challenging market conditions, Pets at Home plans to expand its Vet Group and invest in new insurance propositions while managing cost pressures in its retail segment. The company anticipates a decline in group underlying profit before tax for FY26, projecting it to be between £115-125m, as it navigates subdued market growth and inflationary challenges.

Pets at Home Reports FY25 Results and Outlines FY26 Strategy Amid Market Challenges

Pets at Home Group Plc announced its FY25 pre-close statement, reporting an expected underlying profit before tax of £133 million, aligning with prior guidance. The company achieved significant milestones, including record Pets Club memberships, enhanced customer satisfaction, and the completion of major strategic programs such as network optimization and a new digital platform. Looking ahead to FY26, the company anticipates a challenging market environment but plans to continue investing in its Vet Group and digital initiatives to outperform the market. Despite facing cost pressures, Pets at Home aims to control costs and expects a decline in retail underlying profit before tax, projecting a group underlying PBT of £115-125 million.

Pets at Home Announces Update in Shareholder Voting Rights

Pets at Home Group Plc has announced a voluntary disclosure due to an update in the chain of corporations controlled by its substantial shareholder, FMR LLC. This update reflects an increase in voting rights from 8.46% to 9.85%, indicating a stronger influence of FMR LLC on the company, which may impact the company’s governance and future strategic decisions.