The Russia-Ukraine war has worsened pandemic-induced global logistic disruptions, contributing to record-high inflation. The pet care industry has not been exempted from the impact of rising prices; pet parenthood is now more expensive than ever. However, demand for pet care goods and services remains stable despite the rising costs.
Furthermore, pet adoption soared during the pandemic, and the trend is continuing. Lifestyle changes have led to a continuing increase in pet adoption. According to a Forbes report, 66% of pet owners now spend more on their pets than themselves. In addition, according to Grand View Research, the pet care services segment is predicted to grow at a 5.2% CAGR until 2030.
So, we think it could be wise to bet on fundamentally strong pet care stocks Petco Health and Wellness Company, Inc. (WOOF), Zoetis Inc. (ZTS), and IDEXX Laboratories, Inc. (IDXX).
Petco Health and Wellness Company, Inc. (WOOF)
WOOF, a San Diego-based health and wellness company, focuses on enhancing the lives of pets, pet parents, and its Petco partners. The company provides veterinary care, grooming, training, telehealth, Vital Care and pet health insurance services, and veterinary services through Vetco mobile clinics. It operates approximately 1,500 Petco locations.
On March 8, 2022, Ron Coughlin, WOOF’s Chairman and CEO, said, “Our category remains strong and resilient; our competitive moats are deepening, and our world-class team is executing to deliver purpose driven performance. With an integrated omnichannel infrastructure, robust services offering including 197 veterinary hospitals, and millions of net new customers, we are well positioned to drive enhanced long-term shareholder value.”
WOOF’s net sales came in at $1.51 billion for its fourth fiscal quarter ended Jan. 29, 2022, up 13.2% year-over-year. Its net income came in at $28.99 million, compared to a $6.16 million loss in the previous period. Also, the company’s EPS came in at $0.11, compared to a $0.03 loss per share in the year-ago period.
For its fiscal 2024, analysts expect WOOF’s revenue to be $6.65 billion, representing a 7.3% year-over-year rise. In addition, the company’s EPS is expected to increase 48.8% per annum over the next five years. Also, it surpassed the consensus EPS estimates in each of the trailing four quarters. And over the past three months, the stock has gained 21.9% in price to close yesterday’s trading session at $21.72.
WOOF’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has a B grade for Growth. Within the Consumer Goods industry, it is ranked #6 among 62 stocks. Click here to see the additional POWR Ratings for Value, Momentum, Stability, Sentiment, and Quality for WOOF.
Zoetis Inc. (ZTS)
ZTS in Florham Park. N.J., discovers, develops, manufactures, and commercializes animal health medicines, vaccines, and diagnostic products in the United States and internationally. It commercializes products primarily across species, including livestock, such as cattle, swine, poultry, fish, sheep; and companion animals comprising dogs, cats, and horses.
On Feb. 15, 2022, Kristin Peck, ZTS’ CEO, said, “We expect to continue growing revenue faster than the market in the coming year, driven by continued strength in pet care; expansion of our diagnostics portfolio internationally; and significant growth in both livestock and companion animal product sales in emerging markets, including China and Brazil.”
ZTS’ revenue increased 8.9% year-over-year to $1.97 billion for its fourth quarter ended Dec. 31, 2021. Its non-GAAP adjusted net income came in at $2.24 billion, up 21.5% year-over-year, while its non-GAAP adjusted EPS was $4.70, up 22.1% year-over-year.
Analysts expect ZTS’s revenue to increase 8.5% year-over-year to $8.44 billion in 2022. The company’s EPS is also expected to grow 13.2% year-over-year to $5.85 in 2023. It surpassed EPS estimates in each of the trailing four quarters. The stock closed yesterday’s trading session at $182.81.
ZTS has an overall A rating, which indicates a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Stability and Sentiment. Within the Medical - Pharmaceuticals industry, it is ranked #12 of 172 stocks. Click here to see the additional POWR Ratings for Growth, Value, and Momentum for ZTS.
Click here to checkout our Healthcare Sector Report for 2022
IDEXX Laboratories, Inc. (IDXX)
IDXX develops, manufactures, and distributes products and services primarily for the companion animal veterinary, livestock and poultry, dairy, and water testing markets worldwide. The Westbrook, Maine-based concern operates through CAG; Water Quality Products; LPD; and Other segments.
On Feb. 2, 2022, Jay Mazelsky, IDXX’s CEO, said, “As a purpose-driven company focused on improving the health and well-being of pets, people and livestock, our outstanding results reflect the high levels of execution across the IDEXX organization through the challenges of the COVID-19 pandemic. We are well-positioned to build on this momentum moving forward and to address the still significant untapped potential for companion animal healthcare globally.”
IDXX’s revenue for the fourth quarter, ended Dec. 31, 2021, came in at $801.09 million, up 11.1% year-over-year. Its gross profit came in at $456.42 million, up 11.5% year-over-year. Furthermore, its income from operations came in at $199.19 million, up 7.6% year-over-year.
Analysts expect IDXX’s revenue to increase 11.2% year-over-year to $3.94 billion in its fiscal year 2023. Its EPS is expected to increase 24.2% per annum for the next five years. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock closed yesterday’s trading session at $486.81.
It is no surprise that IDXX has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Quality and a B grade for Stability.
IDXX is ranked #22 of 159 stocks in the Medical - Devices & Equipment industry. In addition to the POWR Ratings I have just highlighted, we have also rated the stock for Growth, Value, Momentum, and Sentiment. Click here to get all the IDXX ratings.
Click here to checkout our Healthcare Sector Report for 2022
WOOF shares were trading at $22.52 per share on Tuesday afternoon, up $0.80 (+3.68%). Year-to-date, WOOF has gained 13.79%, versus a -6.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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