A Financial Ratio Quarterly Trend Analysis of
Stock symbol: PETM
Listed on the Nasdaq
In partial fulfillment of the requirements of the course:
This report provides a financial quarterly trend analysis for Petsmart, Inc. The U.S.-based company, together with its subsidiaries, operates as a specialty retailer of products, services, and solutions for pets in North America. The company offers consumables, which include pet food, treats, and litter; and hardgoods, such as pet supplies and other goods comprising collars, leashes, health care supplies, grooming and beauty aids, toys, apparel, and pet beds and carriers, as well as aquariums and habitats, accessories, decors, and filters for fishes, birds, reptiles, and small pets. It also provides fresh-water tropical fish, birds, reptiles, and small pets; and pet services, such as grooming, including precision cuts, baths, toenail trimming and grinding, and toothbrushing; and training, boarding, and day camp services. Further, the company operates PetsHotels that offer boarding for dogs and cats, temperature controlled rooms and suites, daily specialty treats and play time, and day camp services for dogs; and hospitals, which provide veterinary services comprising routine examinations and vaccinations, dental care, a pharmacy, and surgical procedures. As of March 25, 2010, it operated 1,149 retail stores; and 162 PetsHotels. Additionally, the company operated 740 hospitals under the registered trade names of Banfield and The Pet Hospital; and had 12 hospitals, which are operated by other third parties in Canada. PetSmart, Inc. was founded in 1986 and is based in Phoenix, Arizona.
Our team chose to analyze PETM for the following reasons:
• All of the team members are pet owners with an appreciation for this well run company. • We all found the business model and charitable integration intriguing. • A pet store that doesn’t sell dogs or cats?
• One of our team members has a family member that was recently employed with Petsmart at their Scottsdale headquarters in Arizona.
Using various financial websites, we obtained financial statements and trading information for PETM. Finding comparative information for PETM proved difficult, as its closest competitor, PetCo turned private in a buyout from investors in 2006. Other companies that compete for the pet supply business are retailers such as Wal-Mart and Costco, but they do not provide a good basis for financial comparison for two main reasons: (1) they don’t provide the breadth of services and (2) pet supplies is a very small portion of their business. Key financial ratios for PETM were computed for the four most recent quarters, and these form the basis for the financial trends for comparative financial analysis. By means of comparison, PETM can be compared to the market leaders within the Specialty Retail Market, but this comparison needs to be viewed with discretion. In addition, we carried out a comparative SWOT analysis for PETM and used this qualitative information, together with the quantitative data from the previously mentioned trend and industry comparative analyses, to provide recommendations to investors and lenders.
Financial Ratio Calculation and Analysis
Our team obtained income statements, balance sheets, cash flow statements and trading information for PETM for the four most recent quarters (December 2009, March 2010, June 2010 and September 2010) from four internet sources, namely:
• Yahoo! Finance
• Market Watch
• CNN Money
• Company Website
Overall, we found that Bloomberg and Morningstar had the most closely corresponding information (with differences in only two categories), which were resolved by consulting the other financial websites and PETM’s quarterly and annual reports, all of which supported the...
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