Pet Valu Holdings Ltd. (PET) AI Stock Analysis

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TSE:PET Dividends

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Pet Valu Holdings Ltd.

(TSX:PET)

67Neutral

Pet Valu Holdings Ltd. shows strong financial fundamentals and a positive outlook for 2025, highlighted by revenue and store expansion. However, high leverage and current technical downtrends limit the stock's score. The valuation is fair, offering some income through dividends, but the market momentum is weak, necessitating caution.

Positive Factors

Earnings Growth

PET is well-positioned to achieve low-double-digit EPS growth over the long term despite continued macro pressures.

Market Position

PET remains disciplined and will focus on targeted promotions geared toward high-value, loyal customers.

Negative Factors

Competitive Pressure

Promotional pressures and competition remain intense going into the holiday season.

Macroeconomic Challenges

The timing for macroeconomic and consumer improvement is now further delayed to 2H25.

Pet Valu Holdings Ltd. (PET) vs. S&P 500 (SPY)

Market Cap

C$1.99B

Dividend Yield1.6%

Average Volume (3M)88.88K

Price to Earnings (P/E)23.0

Beta (1Y)0.51

Revenue Growth3.91%

EPS Growth-2.63%

CountryCA

Employees2,086

SectorConsumer Cyclical

Sector Strength59

IndustrySpecialty Retail

Share Statistics

EPS (TTM)1.22

Shares Outstanding70,575,700

10 Day Avg. Volume69,027

30 Day Avg. Volume88,882

Financial Highlights & Ratios

PEG Ratio213.71

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$31.90

Price Target Upside13.28% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

Pet Valu Holdings Ltd. Business Overview & Revenue Model

Company DescriptionPet Valu Holdings Ltd. (PET) is a leading specialty retailer of pet food and pet-related supplies in Canada. The company operates a network of corporate-owned and franchised stores under various brand banners, including Pet Valu, Bosley's, and Total Pet. Pet Valu offers a diverse range of products including pet food, treats, toys, and accessories that cater to the needs of pet owners. The company prides itself on providing high-quality products and exceptional customer service, aiming to enhance the lives of pets and their owners.

How the Company Makes MoneyPet Valu Holdings Ltd. generates revenue primarily through the sale of pet food and pet-related products in its retail stores. The company's revenue model is built on both corporate-owned and franchised stores, allowing it to expand its market presence while reducing operational risks. Key revenue streams include sales of premium pet food brands, proprietary brands, and a wide assortment of ancillary pet products such as toys, health and wellness items, and grooming supplies. The company also benefits from strategic partnerships with leading pet product manufacturers, which help in expanding its product offerings and enhancing customer loyalty. Additionally, franchising fees and royalties from franchise-operated stores contribute to the company’s revenue. Pet Valu's focus on customer service and community engagement through local events and educational programs further supports its strong market position.

Pet Valu Holdings Ltd. Financial Statement Overview

Summary

Pet Valu Holdings Ltd. presents a solid financial performance with consistent revenue growth and strong cash flow generation. While the company maintains healthy profitability margins, high leverage poses potential risks. The company has improved its equity position, although it still relies heavily on debt financing.

Income Statement

Positive

Pet Valu Holdings Ltd. shows a consistent revenue growth trend with a 3.91% increase from 2023 to 2024. Gross profit margin decreased slightly from 34.58% in 2023 to 33.23% in 2024, while the net profit margin remained stable at around 7.97% in 2024, down slightly from 8.48% in 2023. EBIT and EBITDA margins are healthy, indicating good operational efficiency. However, the slight dip in EBIT margin from 15.70% in 2023 to 14.16% in 2024 reflects increased operational costs.

Balance Sheet

Positive

The company's balance sheet shows high leverage with a debt-to-equity ratio of 7.82 in 2024, up from 10.57 in 2023, indicating significant reliance on debt financing. The return on equity (ROE) is strong at 91.31% in 2024, reflecting efficient use of equity to generate profits. The equity ratio improved to 9.86% in 2024 from 7.60% in 2023, showing a slight increase in equity proportion within the total assets.

Cash Flow

Positive

Pet Valu Holdings Ltd. demonstrates robust cash flow management with a 84.87% increase in free cash flow in 2024 compared to 2023. The operating cash flow to net income ratio of 2.29 in 2024 signifies strong cash generation relative to net income. The free cash flow to net income ratio improved to 1.53 in 2024, highlighting the company's ability to convert net income into free cash flow effectively.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.10B	1.06B	951.70M	776.01M	648.46M
	Gross Profit
364.64M	365.14M	352.30M	287.18M	230.63M
	EBIT
155.32M	165.73M	160.19M	129.41M	102.68M
	EBITDA
231.16M	215.41M	206.12M	206.78M	136.13M
	Net Income Common Stockholders
87.42M	89.55M	100.77M	95.36M	28.62M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
35.14M	28.44M	63.03M	50.07M	71.48M
	Total Assets
970.93M	916.91M	740.18M	599.17M	562.12M
	Total Debt
749.29M	737.13M	605.11M	584.41M	923.02M
	Net Debt
714.15M	708.68M	542.08M	534.34M	851.54M
	Total Liabilities
875.18M	847.19M	739.80M	693.70M	1.03B
	Stockholders Equity
95.75M	69.72M	376.00K	-94.52M	-588.53M
Cash Flow		Free Cash Flow
133.42M	72.17M	79.11M	109.70M	131.02M
	Operating Cash Flow
200.08M	135.34M	123.52M	138.16M	152.14M
	Investing Cash Flow
-8.52M	-16.15M	-17.32M	3.99M	11.55M
	Financing Cash Flow
-183.82M	-153.78M	-92.80M	-163.34M	-135.90M

Pet Valu Holdings Ltd. Technical Analysis

Technical Analysis Sentiment

Positive

Last Price28.16

Price Trends

50DMA

25.57

Positive

100DMA

25.46

Positive

200DMA

25.52

Positive

Market Momentum

MACD

0.74

Negative

RSI

63.26

Neutral

STOCH

81.41

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:PET, the sentiment is Positive. The current price of 28.16 is above the 20-day moving average (MA) of 26.23, above the 50-day MA of 25.57, and above the 200-day MA of 25.52, indicating a bullish trend. The MACD of 0.74 indicates Negative momentum. The RSI at 63.26 is Neutral, neither overbought nor oversold. The STOCH value of 81.41 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:PET.

Pet Valu Holdings Ltd. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LNF	76 Outperform	C$1.59B	10.31	14.17%	3.35%	1.78%	10.47%
CTC.A	73 Outperform	C$8.55B	9.46	15.17%	4.63%	-1.79%	318.70%
PET	67 Neutral	C$1.99B	23.03	105.66%	1.60%	3.91%	-2.63%
Sector *	61 Neutral	$6.65B	11.64	3.00%	3.98%	2.61%	-21.41%
CVO	61 Neutral	C$600.50M	―	-7.32%	―	8.86%	56.67%
DOO	45 Neutral	$3.49B	19.66	-3.01%	1.75%	-23.54%	-130.34%
DII.B	40 Underperform	$53.63M	―	-128.88%	―	0.83%	-181.58%

* Consumer Cyclical Sector Average

Performance Comparison

TSE:PET

Pet Valu Holdings Ltd.

28.16

-3.36

-10.66%

TSE:DOO

BRP

47.75

-45.31

-48.69%

TSE:DII.B

Dorel Class B

1.65

-4.36

-72.55%

TSE:CTC.A

Canadian Tire

150.95

20.53

15.74%

TSE:LNF

Leon's Furniture

23.25

2.31

11.03%

TSE:CVO

Coveo Solutions

6.23

-1.91

-23.46%

Pet Valu Holdings Ltd. Earnings Call Summary

Earnings Call Date:Mar 04, 2025

(Q3-2024)

% Change Since: 17.28%|

Next Earnings Date:May 06, 2025

Earnings Call Sentiment Positive

The earnings call reflected a resilient performance by Pet Valu amidst challenging economic conditions. While the company faced negative same-store sales growth and macroeconomic headwinds, it achieved notable revenue and adjusted EBITDA growth, driven by strategic investments in supply chain and franchise expansion. The increase in free cash flow and proactive cost management underscored the company's strong financial position. However, challenges such as increased competitive pressure and the need for further price adjustments were acknowledged.

Q3-2024 Updates

Positive Updates

Revenue Growth

Despite flat system-wide sales and negative same-store sales growth, Pet Valu achieved over 5% revenue growth, driven by higher wholesale shipments and the addition of 50 franchise stores in the past 12 months.

Adjusted EBITDA Growth

Pet Valu reported a 13% growth in adjusted EBITDA, a significant financial accomplishment amidst challenging macroeconomic conditions.

Free Cash Flow Increase

Year-to-date, Pet Valu generated over $60 million in free cash flow, surpassing annual amounts in both 2022 and 2023, allowing earlier-than-expected share buybacks.

Supply Chain Transformation

Successful opening of a new distribution center in Surrey, BC, and significant advancements in supply chain capacity, supporting future store growth and improved operational efficiencies.

Negative Updates

Negative Same-Store Sales Growth

Same-store sales declined by 2.5%, with a 2% growth in average basket offset by a 4% decline in transactions.

Macroeconomic Headwinds

Persistent macroeconomic challenges resulted in constrained consumer spending, impacting Pet Valu's sales performance.

Increased Competitive Pressure

Heightened promotional intensity, particularly in discretionary categories like hardlines and treats, requiring adjustments to pricing strategies.

Company Guidance

In the Pet Valu Q3 2024 earnings call, management provided guidance indicating expectations for revenue between $1.08 billion and $1.1 billion, driven by the growth of their store network, increased wholesale penetration, and roughly flat same-store sales growth. Adjusted EBITDA is projected to be between $243 million and $246 million, with softer margins anticipated in Q4 due to promotional and advertising intensity and strategic pricing actions. The company expects adjusted net income per diluted share to be between $1.50 and $1.53. Despite economic headwinds, Pet Valu has generated over $61 million in free cash flow year-to-date, surpassing previous years and enabling the commencement of share buybacks. Looking forward, Pet Valu anticipates continued earnings growth, particularly in the second half of 2025, while maintaining focus on generating over $100 million in free cash flow.

Pet Valu Holdings Ltd. Corporate Events

DividendsBusiness Operations and StrategyFinancial Disclosures

Pet Valu Reports Revenue Growth and Sets Positive Outlook for 2025

Positive

Mar 4, 2025

Pet Valu Holdings Ltd. reported a 4% increase in revenue and a 7% rise in adjusted EBITDA for the fiscal year 2024, with net income reaching $87 million. The company opened 19 new stores, bringing its total to 824, and declared a 9% increase in its quarterly dividend. Looking ahead to 2025, Pet Valu anticipates further growth with expected revenue between $1.17 and $1.20 billion, and plans to complete its supply chain transformation to enhance same-store sales and profit growth.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.