Web Site
Google Finance
SEC Filing
Year end at Mar.31
Oct. 31, 2011
2012 Q2 Data
Check list:
1.Major Business.
US Pet medications.Total pet medication is estimated at $3.8B which veterinarians take the majority of the market. PETS has revenue around $200m.
OTC: 60% with lower margin. Prescription: 40% with higher margin.
Online:
Q1, Q2 Summer season is around 30% in sales each quarter. Q3, Q4 windows season 20% in sales each quarter.
2.Balance sheet.
Recent Price: $10. Tangible book value: $3.80, Share outstanding: 20m, Market Cap:$200m.
Current asset:: $81.5m, Current liability:$8.7m, Debt: 0, Inventory:$19m, Cash:$72m.
Current ratio >= 8.
3.Credit facility.
not important
4.Financial data by years.
| 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 228 | 238 | 232 | 238 | 219 | 188 | 162 | 137 | 108 | 94 | 55 | 32 |
| Income | 17.1 | 16.7 | 20.9 | 26 | 22 | 20 | 14.4 | 12 | 8 | 5.8 | 3.3 | 0.8 |
| CF-WC | 20.0 | 20.3 | 24.8 | 28.6 | 25.8 | |||||||
| CAPx | 0.6 | 0.7 | 0.7 | 1.0 | 3.7 | |||||||
| Cash | 33.6 | 57.1 | 72 | 65.5 | 44.5 | 50 | 39.5 | 23 | 12.5 | 3.3 | 1.0 | 0.7 |
| Dividend | 1.6 | 0.525 | 0.475 | 0.30 |
5.Cost structure
68% of the sales are from website.
6.Insider holding, options, Insider trading info, share buy back.
Menderes Akdag: CEO 520k 2%
7.Management compensation.
Menderes Akdag(CEO): $776k, except 2010 at $3.5m. The rest are $0.5 to $1m a year.
Bruce S. Rosenbloom(CFO): $482k
8.Employee numbers. Revenue/Employee. Compensation/Employee.
204 employees at 2011. Most are for customer care and order fulfilment.
9.Industry comparison.
Prescription pets drugs. registered list here: link
PetCareRx.com: similar price
Centerpetpharmacy.com: similar price
kvsupply.com: Even cheaper than petmeds.
NationalPetMeds.com: redirect to Petmeds.com
Wag.com(Amazon): the same cheap price.
EntirelyPets.com: Similar price
PetShed.com: similar price
10.Auditor
Better be among the big four.
11.Major events.
Business acquisition, law suit etc.
12.Comments.
1. The company has been able to grow from $10m to over $200m in revenue within several years. However, the growing era had passed. Now if it can maintain current sales level, it is still a good business.
2. The business margin is keep going down as both online and offline competition is tougher, for example Amazon launches wag.com while Walmart and other store start selling pets medication as well.
3. The prescription drug is its core business. It seems to be competitive and still growing.
4. Since the management owns quite a few shares. They should be more interested in buy back shares than distribute dividend.
5. Overall, this is a very good managed business and current price seems cheap. (P/E: 10). However, The current income or FCF doesn't means much for this company. It is reasonable to expect that the profit margin will continue to be down. Currently 10% is too high, thus the current price is still not cheap enough.
8.Employee numbers. Revenue/Employee. Compensation/Employee.
204 employees at 2011. Most are for customer care and order fulfilment.
9.Industry comparison.
Prescription pets drugs. registered list here: link
PetCareRx.com: similar price
Centerpetpharmacy.com: similar price
kvsupply.com: Even cheaper than petmeds.
NationalPetMeds.com: redirect to Petmeds.com
OTC drugs, including:
Petsmart: pretty expensive. Doesn't seems to offer online prescription.Wag.com(Amazon): the same cheap price.
EntirelyPets.com: Similar price
PetShed.com: similar price
10.Auditor
Better be among the big four.
11.Major events.
Business acquisition, law suit etc.
12.Comments.
1. The company has been able to grow from $10m to over $200m in revenue within several years. However, the growing era had passed. Now if it can maintain current sales level, it is still a good business.
2. The business margin is keep going down as both online and offline competition is tougher, for example Amazon launches wag.com while Walmart and other store start selling pets medication as well.
3. The prescription drug is its core business. It seems to be competitive and still growing.
4. Since the management owns quite a few shares. They should be more interested in buy back shares than distribute dividend.
Updated June. 10, 2013
1.Quality Score: 7.
2.FCF-WC for past 5 years average is $22.5m/year. Share based compensation is about $1.9m/year. Base price = 20.6/20*15=$15.4.
