What Happened?
Shares of pet-focused retailer Petco (NASDAQ: WOOF) jumped 35.1% in the morning session after the company reported impressive fourth quarter 2024 results. Sales were in line with expectations, while EBITDA came in significantly ahead.
Despite the sales decline recorded during the quarter, Petco held its ground on profitability as management provided upbeat guidance for the first quarter which pointed to low single-digit sales declines but an EBITDA margin improvement, which helped ease investor concerns.
All told, this was a strong quarter on the profitability front, even if top-line growth remained sluggish.
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What The Market Is Telling Us
Petco’s shares are extremely volatile and have had 80 moves greater than 5% over the last year. But moves this big are rare even for Petco and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock gained 29.9% on the news that the company reported first quarter results that blew past analysts' EPS expectations. The next quarter's revenue, adjusted EBITDA, and earnings guidance were roughly in line with Wall Street's estimates, showing that the company remained on track with no surprises. Zooming out, this was a solid quarter that should please shareholders.
Petco is down 23.8% since the beginning of the year, and at $3.13 per share, it is trading 45.8% below its 52-week high of $5.77 from October 2024. Investors who bought $1,000 worth of Petco’s shares at the IPO in January 2021 would now be looking at an investment worth $106.29.
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