Skritch-skratch-sktritch! Who's that clawing at the door? Why, it's none other than publicly traded pet stock PetSmart (Nasdaq: PETM ) . Will somebody let it in? It's fetching us the paper, or more specifically, its own first-quarter 2007 earnings report, delivered tomorrow afternoon.
After the news comes out, we'll have time a-plenty to dissect it. But in these few hours before we begin obsessing over PetSmart's short-term progress, let's take a moment to review what investors think about it as a long-term investment. Our tool in this endeavor: Motley Fool CAPS, where we poll more than 28,000 rated investors for their views on well over 4,000 companies, PetSmart among them. Here's what Fools have to say about the company.
Up or down?
Nearly 300 investors have submitted ratings on PetSmart. Their verdict: Good dog. Very good dog.
Fully 97% of CAPS investors expect PetSmart to outperform the market, although if you focus in on what the very best investors -- the CAPS All-Stars -- are saying, that drops to a more muted 95% approval. That's more than sufficient to win PetSmart the coveted blue ribbon, a five-star rating from CAPS.
That makes PetSmart best-in-show for its CAPS peer group:
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Other Specialty Retailer Group
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CAPS Rating
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PetSmart
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*****
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PetMed Express (Nasdaq: PETS )
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*****
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Tractor Supply (Nasdaq: TSCO )
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***
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Borders Group (NYSE: BGP )
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**
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Barnes & Noble (NYSE: BKS )
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**
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1-800 Flowers.com (Nasdaq: FLWS )
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*
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Overstock.com (Nasdaq: OSTK )
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*
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Wall Street vs. Main Street
Wall Street sentiment parallels that of Main Street, only more so. All seven of the professional analysts whose ratings we track expect PetSmart to outperform -- as indeed it has, beating the S&P 500 average by about five points over the last 52 weeks.
Bull pitch
Bulls cite a "poorly managed" Petco as its primary competition; a dearth of other sizeable, focused competitors; and positive demographic trends as all working in PetSmart's favor. As one All-Star investor observes: "Americans seem to spend more on their pets (especially dogs) every year." And for serving that trend, PetSmart is the pick of the litter. Another All-Star notes: "this store is so sticky it's creepy." (I think he means that in a good way.)
Bear pitch
Hardly an ursine growl is heard on the PetSmart board on CAPS. About the most bears can muster are muttered complaints that the stock looks overpriced at 25 times earnings, when analysts expect it to grow at "just" 18% per year going forward. The fact that these same analysts overestimated PetSmart's growth in two of the last four quarters doesn't help much, either.
Who said that?
To learn the identities of the wise Fools who penned these thoughts, and explore the plethora of additional financial data we've put together on the company, just click here.
And if you're interested in exploring the stock even further, grab a free trial subscription to Motley Fool Stock Advisor on your way out. As an official recommendation of the newsletter, we've got a detailed investment thesis laid out for PetSmart, along with up-to-date commentary on the company's performance since we first recommended it two years ago.
Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 999 out of nearly 29,000 raters. Borders Group is an Inside Value recommendation.
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