PetMed Express Earnings Preview

After beating estimates last quarter by $0.05, PetMed Express (Nasdaq: PETS  ) has set the standard for itself. The company will unveil its latest earnings on Monday. PetMed Express is a nationwide pet pharmacy. The company markets prescription and nonprescription pet medications and other health products for dogs, cats, and horses direct to the consumer.

What analysts say:

• Buy, sell, or hold?: Analysts like PetMed Express better than competitor China Nepstar Chain Drug overall. Zero out of two analysts rate China Nepstar Chain Drug a buy compared to one of six for PetMed Express. Analysts still rate the stock a moderate sell, but they are a bit more wary about it compared to three months ago.
• Revenue forecasts: On average, analysts predict $44.8 million in revenue this quarter. That would represent a decline of 0.8% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $0.16 per share. Estimates range from $0.15 to $0.17.

What our community says:
CAPS All-Stars are solidly behind the stock with 96.1% granting it an outperform rating. The community at large agrees with the All-Stars with 97.2% awarding it a rating of outperform. Fools are gung-ho about PetMed Express and haven't been shy with their opinions lately, logging 330 posts in the past 30 days. Even with a robust four out of five stars, PetMed Express' CAPS rating falls a little short of the community's upbeat outlook.

Management:
PetMed Express' income has fallen year over year by an average of 26.2% over the past five quarters. Revenue has fallen in the past two quarters. The company's gross margin shrank by 2.2 percentage points in the last quarter. Revenue fell 4.9% while cost of sales fell 1.6% to $38.3 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter	Q2	Q1	Q4	Q3
Gross Margin	34.2%	32.8%	34.3%	37.5%
Operating Margin	10.4%	10.3%	12.7%	15.6%
Net Margin	6.7%	6.6%	8.1%	10.0%

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Earnings estimates provided by Zacks.