Petco Health & Wellness Company, Inc. (NASDAQ: WOOF)

Sector: Consumer Cyclical Industry: Specialty Retail CIK: 0001826470
Market Cap 555.59 Mn
P/B 0.48
P/E -253.00
P/S 0.09
ROIC (Qtr) 7.89
Div Yield % 0.00
Rev 1y % (Qtr) -3.11
Total Debt (Qtr) 2.97 Bn
Debt/Equity (Qtr) 2.57
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About

Investment thesis

Bull case

  • Tangible assets of 3.20B provide robust 9.95x coverage of other current liabilities 321.73M, indicating strong asset backing.
  • Operating cash flow of 256.52M exceeds receivables of 42.90M by 5.98x, demonstrating excellent collection efficiency.
  • Tangible assets of 3.20B provide robust 2.90x coverage of current liabilities 1.10B, showing strong asset backing.
  • Tangible assets of 3.20B provide robust 74.59x coverage of receivables 42.90M, showing strong asset quality.

Bear case

  • Operating cash flow of 256.52M barely covers its investment activities of (121.82M), with a coverage ratio of -2.11, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 237.41M provide limited coverage of acquisition spending of (165000), which is -1438.87x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 256.52M provides minimal -101.35x coverage of tax expenses of (2.53M), suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Operating earnings of 129M show weak coverage of depreciation charges of 610.12M, with a 0.21 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 610.12M relative to operating cash flow of 256.52M, which is 2.38x suggests significant maintenance capital requirements affecting free cash flow.

Peer comparison

Companies in the Specialty Retail
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ULTA Ulta Beauty, Inc. 32.20 Bn 27.06 2.69 2.57 Bn
2 WSM Williams Sonoma Inc 29.62 Bn 25.19 3.40 1.47 Bn
3 TSCO Tractor Supply Co /De/ 28.42 Bn 25.23 1.93 5.72 Bn
4 DKS Dick'S Sporting Goods, Inc. 24.98 Bn 88.10 4.64 7.70 Bn
5 CASY Caseys General Stores Inc 24.65 Bn 59.49 1.65 2.92 Bn
6 BBY Best Buy Co Inc 17.85 Bn 11.66 0.41 4.09 Bn
7 MUSA Murphy USA Inc. 15.91 Bn 61.33 1.35 2.75 Bn
8 FIVE Five Below, Inc 11.68 Bn 37.94 2.64 2.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.64 2.23
EV to Cash from Ops. EV/CFO 12.89 14.70
EV to Debt EV to Debt 1.11 79.39
EV to EBIT EV/EBIT 25.64 -40.16
EV to EBITDA EV/EBITDA 4.62 11.51
EV to Free Cash Flow [EV/FCF] EV/FCF 25.01 -286.14
EV to Market Cap EV to Market Cap 5.95 6.33
EV to Revenue EV/Rev 0.55 2.39
Price to Book Value [P/B] P/B 0.48 32.78
Price to Earnings [P/E] P/E -253.00 -36.32
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -4.05
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 14.19
Dividend per Basic Share Div per Share (Qtr) 0.00 0.71
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 18.58
Interest Coverage Int. cover (Qtr) 0.96 4.43
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 10.52 13.87
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 103.48 33.75
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.00
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 292.20 -272.99
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 16.35 588.45
EBIT Growth (1y) % EBIT 1y % (Qtr) 612.60 29.27
EBT Growth (1y) % EBT 1y % (Qtr) 96.39 -92.23
EPS Growth (1y) % EPS 1y % (Qtr) 97.44 -121.86
FCF Growth (1y) % FCF 1y % (Qtr) 1,402.90 71.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -1.19 2.50
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.15 1.24
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.04
Cash Ratio Cash Ratio (Qtr) 0.22 0.74
Current Ratio Curr Ratio (Qtr) 0.91 3.56
Debt to Equity Ratio Debt/Equity (Qtr) 2.57 25.92
Interest Cover Ratio Int Coverage (Qtr) 0.96 4.43
Times Interest Earned Times Interest Earned (Qtr) 0.96 4.43
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 12.30 -42.64
EBIT Margin % EBIT Margin % (Qtr) 2.15 -131.12
EBT Margin % EBT Margin % (Qtr) -0.08 -64.70
Gross Margin % Gross Margin % (Qtr) 38.60 30.93
Net Profit Margin % Net Margin % (Qtr) 0.00 -65.71