High Dividend 50: Petmed Express, Inc.

Printed on March 26, 2022, by Felix Martinez

When you have a furry good friend in your loved ones, there’s a excessive possible hood that you simply introduced some sort of remedy from PetMed Categorical, Inc. (PETS) for the pet.

PetMed Categorical, Inc. (PETS) is a high-yield dividend inventory with no debt on its steadiness sheet.

We additionally cowl a variety of different completely different high-yield shares in our database.

We’ve created a spreadsheet of shares (and carefully associated REITs and MLPs, and so on.) with dividend yields of 5% or extra…

You possibly can obtain your free full listing of all securities with 5%+ yields (together with vital monetary metrics akin to dividend yield and payout ratio) by clicking on the hyperlink beneath:

Thus, for the next high-yield shares on this collection, we’ll assessment PetMed Categorical, Inc. (PETS), with a dividend yield of 4.4%.

Enterprise Overview

PetMed Categorical was based in 1996 by Marc Puleo. PETS initially grew by way of phrase of mouth, tv commercials, and catalogs. The corporate is America’s most trusted pet pharmacy, delivering prescription and nonprescription pet drugs and different well being merchandise for canine, cats, and horses at aggressive costs direct to the buyer by way of its toll-free quantity and on the Web by way of its web site.

The corporate headquarters is in Delray Seaside, Florida. PetMed Categorical, Inc. trades palms within the Nasdaq utilizing the ticker image PETS. PETS has been rising its dividend for over 13 years and made $309 million in gross sales for Fiscal 12 months (FY) 2021. At present, PetMed Categorical has a market cap of $555.7 million.

Supply: Investor Presentation

On January 24, 2022, PetMed Categorical reported third-quarter outcomes for the Fiscal 12 months 2022. The corporate fiscal 12 months ends on the final day of March yearly. Gross sales have been down 7.9% for the quarter in comparison with the third quarter of FY2021. For the quarter, the corporate generated gross sales of $60.7 million, decrease than the overall gross sales of $65.9 million in 3Q2021. Internet gross sales are down 12.7% for the primary 9 months of the fiscal 12 months, from $237.5 million in FY2020 to $207.4 million this fiscal 12 months. Internet earnings was $4.3 million, or $0.21 diluted per share, for the quarter, in comparison with internet earnings of $7.6 million, or $0.38 diluted per share, for 3Q2020, a 44% lower year-over-year.

For the 9 months of the fiscal 12 months, internet earnings is down 37% year-over-year. This was a singular quarter as a result of the corporate was coming off a stable quarter throughout the pandemic. The third quarter of FY2021 was pushed by elevated on-line shopping for as a result of many shops and vets have been closed. We anticipate PetMed to make $1.17 per share for FY2022. This could characterize a lower of 23% in comparison with your entire fiscal 12 months of 2021.

Supply: Investor Presentation

Development Prospects

Probably the most important development prospects for PedMed Categorical are by way of internet marketing and persevering with to develop to reorder gross sales because it did for FY2021. Ecommerce demand elevated on account of COVID-19, so the administration staff is hopeful that this can proceed to increase its reorder gross sales. We anticipate a 6% earnings development for the following 5 years as eCommerce grows and extra folks have pets as relations. This development price is barely decrease than its ten-year common of seven.4%.

Different development prospects could be that prospects are more and more looking for pet wholesome locations. As an increasing number of folks change into health-conscious, they’re additionally turning into extra health-conscious of their pets. This could assist to proceed to drive development for the corporate.

The corporate works with 70,000+ veterinarians and Vet Clinics across the nation. Working with these animal medical professionals ought to proceed to develop the corporate. This may permit these professionals to suggest and prescribe medical therapies that PetsMed sells.

As you see, the general pet market is a $107 billion business, and we imagine that that is an business that may proceed to develop.

Supply: Investor Presentation

Aggressive Benefits & Recession Efficiency

PetMed doesn’t have a considerable aggressive benefit at present. We expect the corporate has a slim moat presently. The corporate is an internet enterprise that’s simple for rivals to get into. Nonetheless, The Firm does have a slight benefit because it has been in enterprise since 1996, and PetMed Categorical is a really well-known firm with pet lovers.

In the course of the Nice Recession of 2008-2009, the corporate continued to develop its earnings from $0.82 per share in FY2008 to $0.98 per share in FY2009. Popping out of the Nice Recession, PetMed made $1.14 per share in FY2010. Thus, the corporate appears to be like resilient throughout the Nice Recession and the COVID-19 pandemic.

PETS’s earnings-per-share all through the Nice Recession:

• 2007 earnings-per-share of $0.60
• 2008 earnings-per-share of $0.82 (37% improve)
• 2009 earnings-per-share of $0.98 (20% improve)
• 2010 earnings-per-share of $1.14 (16% improve)

As you see, the corporate did very effectively throughout the 2008-2009 Nice Recession. Virtually just like the recession was not even there. We have no idea how the dividend would have carried out as the corporate was not paying a dividend throughout that point. Nonetheless, it’s protected to imagine that the corporate would don’t have any points paying the dividend as earnings have been growing at double-digit charges within the interval

Supply: Investor Presentation

Dividend Evaluation

The corporate has a dividend development historical past of 13 years. In these 13 years, the corporate has a dividend development price of 9.0% within the final ten years and a dividend development price of 9.5% throughout the earlier 5 years. Nonetheless, the dividend development price has been slowing down lately. However, the newest improve was 7.1%.

The next dividend announcement needs to be one other dividend improve as the corporate has been paying the identical dividend price of $0.30 per share per quarter during the last 4 quarters. Nonetheless, we expect it will be a a lot smaller improve due to the elevated dividend payout ratio.

The corporate paid a complete dividend of $1.12 per share for FY2021. In 2021, the corporate Incomes-Per-Share (EPS) was $1.52. This gave a dividend payout ratio of 73.7%, which is excessive however not dangerously excessive. Nonetheless, we anticipate the corporate to make $1.02 EPS for FY2022. This may carry the dividend payout ratio above 100%.

Nonetheless, we expect the dividend can be protected as a result of the corporate has an ideal Free Money Move (FCF) expectation for FY2022. We anticipate the corporate to make FCF per share of $1.81, protecting the dividend with a payout ratio of 66.7%.

The corporate has an excellent steadiness sheet. The one debt PetMed has is $27.5 million. This offers the corporate an asset to liabilities ratio of 0.2. The dividend payout ratio is excessive however not regarding, contemplating the corporate doesn’t have debt.

Thus, we expect the dividend in all fairness protected.

Remaining Ideas

PetMed is a stable firm with many issues to love. The excellent steadiness sheet is top-rated. Additionally, the corporate has had Free Money Move development 12 months in and 12 months out. The one threat is that it has a slim moat and is accessible for a competitor to get into the pet remedy enterprise. Nonetheless, PetMed is a widely known model that ought to assist the corporate proceed rising. The dividend in all fairness protected and the reliable dividend development for the foreseeable future.