tiprankstipranks
Trending News
More News >
Petco Health and Wellness Company (WOOF)
NASDAQ:WOOF
US Market

Petco Health and Wellness Company (WOOF) AI Stock Analysis

Compare
1,066 Followers

Top Page

WO

Petco Health and Wellness Company

(NASDAQ:WOOF)

Rating:47Neutral
Price Target:
$3.00
▼(-2.60%Downside)
Petco's significant financial challenges, including persistent losses and high leverage, are the primary drivers of the low score. Technical analysis indicates mixed signals with potential bearish momentum, while the valuation is unattractive due to negative earnings and no dividend yield. Despite some operational improvements, the overall outlook remains challenging.
Positive Factors
Margin Management
Gross margin of 38.2% was supported by margin management efforts, including merchandising and better management of markdowns & promotions.
Market Opportunity
The Pet category is vibrant with significant growth potential for both product and services, suggesting a strong market opportunity.
Profitability Focus
Profitability is being prioritized over sales, which seems prudent given WOOF's leverage and provides financial flexibility in the future.
Negative Factors
Competitive Challenges
The category is intensely competitive, and consumers tend to be sticky, making it challenging for the company to reshape its brand.
Market Share Risk
There is a continued same-store sales softness in the near-term, and longer-term risk that market share erosion could continue as consumers migrate to online and broadline competitors.
Sales Decline
Net sales were down -2.3% year over year, reflecting comp declines and the impact of 30 net store closings.

Petco Health and Wellness Company (WOOF) vs. SPDR S&P 500 ETF (SPY)

Petco Health and Wellness Company Business Overview & Revenue Model

Company DescriptionPetco Health and Wellness Company, Inc., a health and wellness company, focuses on enhancing the lives of pets, pet parents, and its Petco partners. The company provides veterinary care, grooming, training, tele-health, and Vital Care and pet health insurance services, as well as veterinary services through Vetco mobile clinics. It also offers pet consumables, supplies, and services through its petco.com, petcoach.co, petinsurancequotes.com, and pupbox.com websites. As of March 23, 2022, the company operated approximately 1,500 Petco locations in the United States, Mexico, and Puerto Rico that included a network of approximately 200 in-store veterinary hospitals. Petco Health and Wellness Company, Inc. was founded in 1965 and is headquartered in San Diego, California.
How the Company Makes MoneyPetco Health and Wellness Company generates revenue through multiple streams. The primary source of income is the sale of pet food, supplies, and accessories, which are available both in-store and online. In addition to retail sales, Petco earns income from its grooming services, veterinary care, and training sessions offered at its physical locations. The company also benefits from various partnerships with pet product manufacturers and service providers, enhancing its product offerings and customer reach. These revenue streams are supported by a strong brand presence and a loyal customer base, driving consistent earnings for the company.

Petco Health and Wellness Company Key Performance Indicators (KPIs)

Any
Any
Revenue by Segment
Revenue by Segment
Breaks down revenue from different business areas, highlighting which segments drive growth and profitability, and indicating potential areas of strategic focus or risk.
Chart InsightsPetco's Services and Other segment shows resilience, maintaining growth momentum despite a temporary spike in late 2023. This aligns with the company's focus on operational efficiencies and service improvements, as highlighted in the earnings call. However, the Consumables segment faces challenges, with a recent decline contributing to overall sales decreases, exacerbated by store closures and tariff impacts. The company is prioritizing profitability and operational efficiency, with plans for a new membership program to boost customer loyalty in 2026, aiming to counteract the current sales headwinds.
Data provided by:Main Street Data

Petco Health and Wellness Company Earnings Call Summary

Earnings Call Date:Jun 05, 2025
(Q1-2025)
|
% Change Since: -14.92%|
Next Earnings Date:Aug 21, 2025
Earnings Call Sentiment Neutral
Petco demonstrated strong profitability growth and operational efficiency, despite facing challenges with declining sales and tariff exposure. The company is focusing on improving its retail fundamentals and leveraging operational efficiencies, particularly in its services segment, to offset sales declines. The overall outlook remains cautiously optimistic as the company transitions towards growth initiatives.
Q1-2025 Updates
Positive Updates
Profitability Overperformance
Petco delivered top-line results in line with expectations and over-delivered on profitability goals. Adjusted EBITDA increased by $13.8 million to $89.4 million, expanding 105 basis points to 6% of sales.
Gross Margin Expansion
Gross margin rate expanded by over 30 basis points to 38.2%, with improvements across both product and services business.
Operational Efficiencies
Achieved more than 180 basis points of expense leverage, excluding last year's one-time costs, leveraged approximately 160 basis points.
Service Segment Growth
Services remain the fastest-growing area, contributing to gross margin expansion with improvements in grooming and vet operations.
Strong Cash Position
Ended the quarter with a cash balance of $139 million, an improvement of $48 million compared to last year.
Negative Updates
Decline in Comparable Sales
Comparable sales were down 1.3%, with net sales down 2.3%, driven by net store closures in 2024 and Q1 2025.
Impact of Tariffs
Exposure to tariffs slightly increased from 5% to about 7% due to expanded lists of impacted countries.
Consumables Sales Decline
Consumables sales inflected negatively, contributing to overall sales decline, though this was in line with expectations.
Company Guidance
During the Petco First Quarter 2025 Earnings Conference Call, Petco's leadership emphasized their successful execution of profitability goals, despite a top-line performance in line with expectations. They reported a 1.3% decline in comparable sales and a 2.3% decrease in net sales, largely attributed to store closures. However, they achieved a gross margin expansion of over 30 basis points, reaching 38.2%, and delivered more than 180 basis points of expense leverage. Operating profit increased by $33 million, while adjusted EBITDA rose by $13.8 million to $89.4 million, expanding 105 basis points to 6% of sales. The company's primary focus remains on improving retail fundamentals and financial performance, with a full-year outlook that forecasts net sales to decline by low-single digits, adjusted EBITDA in the range of $375 million to $390 million, and capital expenditures of approximately $125 million to $130 million. They are implementing strategies for merchandise optimization and operational efficiencies to sustain profitability, with plans for a new membership program in 2026, aiming to enhance customer engagement and loyalty.

Petco Health and Wellness Company Financial Statement Overview

Summary
Petco faces significant financial challenges with declining revenue and persistent losses affecting profitability. Despite some cash flow stability, the high leverage and negative ROE pose financial stability risks.
Income Statement
45
Neutral
Petco Health and Wellness Company has shown inconsistent revenue and profitability trends. The TTM revenue of $6.08 billion is slightly down from the previous annual figure of $6.12 billion, indicating a revenue decline. The gross profit margin for TTM is approximately 38.08%, showing some efficiency in cost management. However, the net profit margin is negative at -1.10%, reflecting continued losses. EBIT and EBITDA margins are weak at 0.66% and 4.14%, respectively, highlighting operational challenges.
Balance Sheet
50
Neutral
The company's balance sheet reveals a high debt-to-equity ratio of 2.64, indicating significant leverage. Return on Equity (ROE) is negative due to net losses, which is a concern for profitability. The equity ratio stands at 21.63%, suggesting a moderate level of equity financing relative to total assets. Overall, the balance sheet shows high leverage and limited equity, posing financial stability risks.
Cash Flow
60
Neutral
Petco's cash flow position is somewhat stable with a positive operating cash flow to net income ratio of -2.55, despite net losses, showing some ability to generate cash from operations. Free cash flow to net income ratio is -0.70, indicating challenges in achieving positive free cash flow amidst losses. The free cash flow growth rate is negative, reflecting decreased efficiency in capital allocation.
BreakdownTTMMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue6.08B6.12B6.26B6.04B5.81B4.92B
Gross Profit2.32B2.32B2.35B2.43B2.43B2.11B
EBITDA251.93M7.05M-971.83M407.75M452.22M352.36M
Net Income-66.99M-101.82M-1.28B90.80M164.42M-26.48M
Balance Sheet
Total Assets5.12B5.19B5.36B6.61B6.50B6.08B
Cash, Cash Equivalents and Short-Term Investments133.34M165.76M125.43M201.90M211.60M111.40M
Total Debt2.92B2.94B3.04B3.13B3.05B3.00B
Total Liabilities4.01B4.08B4.18B4.23B4.24B4.02B
Stockholders Equity1.11B1.11B1.18B2.38B2.27B2.07B
Cash Flow
Free Cash Flow46.87M49.68M-9.88M67.98M119.11M109.06M
Operating Cash Flow170.63M177.67M215.72M346.00M358.21M268.62M
Investing Cash Flow-119.29M-123.90M-207.44M-320.32M-237.08M-157.19M
Financing Cash Flow-3.46M-8.75M-85.35M-33.84M-18.78M-146.61M

Petco Health and Wellness Company Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price3.08
Price Trends
50DMA
3.10
Negative
100DMA
2.97
Positive
200DMA
3.65
Negative
Market Momentum
MACD
-0.06
Negative
RSI
56.80
Neutral
STOCH
92.64
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WOOF, the sentiment is Neutral. The current price of 3.08 is above the 20-day moving average (MA) of 2.75, below the 50-day MA of 3.10, and below the 200-day MA of 3.65, indicating a neutral trend. The MACD of -0.06 indicates Negative momentum. The RSI at 56.80 is Neutral, neither overbought nor oversold. The STOCH value of 92.64 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WOOF.

Petco Health and Wellness Company Risk Analysis

Petco Health and Wellness Company disclosed 67 risk factors in its most recent earnings report. Petco Health and Wellness Company reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Petco Health and Wellness Company Peers Comparison

Overall Rating
UnderperformOutperform
Sector (56)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$17.14B46.2576.24%7.64%369.79%
77
Outperform
$35.20B18.2536.48%1.53%2.04%-15.61%
BBBBY
71
Outperform
$15.13B17.5030.21%5.31%-3.23%-28.11%
GPGPC
67
Neutral
$17.68B20.9319.19%3.23%1.99%-32.18%
56
Neutral
$3.37B4.05-1.30%6.64%0.16%-63.79%
GMGME
54
Neutral
$10.55B51.156.62%-25.30%479.26%
47
Neutral
$859.28M-5.90%-2.37%95.07%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
WOOF
Petco Health and Wellness Company
3.08
-0.23
-6.95%
BBY
Best Buy Co
72.10
-9.51
-11.65%
EBAY
eBay
76.36
24.48
47.19%
GME
GameStop
23.59
-0.86
-3.52%
GPC
Genuine Parts Company
127.41
-1.31
-1.02%
CHWY
Chewy
41.29
16.49
66.49%

Petco Health and Wellness Company Corporate Events

Business Operations and StrategyFinancial Disclosures
Petco Reports Q1 2025 Financial Results Amid Sales Dip
Neutral
Jun 5, 2025

On June 5, 2025, Petco Health and Wellness Company reported its financial results for the first quarter of 2025, revealing a 2.3% decrease in net sales to $1.5 billion compared to the previous year, yet achieving an improved operating income of $16.4 million. Despite a slight decline in comparable sales, the company expanded its gross profit margin and improved its GAAP net loss, while reaffirming its fiscal 2025 net sales and earnings outlook. Petco’s CEO highlighted the company’s strategic focus on strengthening retail fundamentals and achieving sustainable growth, with the current market conditions accelerating these efforts.

The most recent analyst rating on (WOOF) stock is a Hold with a $3.25 price target. To see the full list of analyst forecasts on Petco Health and Wellness Company stock, see the WOOF Stock Forecast page.

Executive/Board ChangesShareholder Meetings
Petco Board Member Christy Lake Resigns
Neutral
May 23, 2025

On May 19, 2025, Christy Lake resigned from Petco Health and Wellness Company‘s Board of Directors and its compensation committee, effective after the 2025 Annual Meeting of Stockholders. Her resignation was not due to any disagreement with the company. Following her resignation, the Board decided to reduce its size to 10 directors.

The most recent analyst rating on (WOOF) stock is a Hold with a $5.00 price target. To see the full list of analyst forecasts on Petco Health and Wellness Company stock, see the WOOF Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 05, 2025