What happened

Shares of PetMed Express (PETS -2.00%) were sinking 16.4% as of 11:24 a.m. EDT on Monday. The decline came after the pet pharmacy reported its fiscal 2021 first-quarter results before the market opened. PetMed delivered strong revenue and earnings growth, but  the company's earnings of $0.39 per share narrowly missed the consensus analysts' estimate of $0.40.

So what

PetMed shares trade at nearly 27 times expected earnings. The animal healthcare stock came into this week up more than 70% year to date. This combination of a steep valuation and an impressive year-to-date gain appears to have increased investors' expectations. Any miss -- even a small one -- was enough to cause a pretty large tumble.

Hand holding red pill in front of a dog

Image source: Getty Images.

But there really wasn't anything in PetMed's Q1 update that should have been concerning to investors. The company reported revenue of $96.2 million, up 20% year over year. Its earnings in the first quarter jumped 47% year over year to $7.8 million, or $0.39 in diluted earnings per share.

The COVID-19 pandemic doesn't appear to be hurting PetMed's business at all. The company's operations and supply chain haven't been materially disrupted. Consumers are continuing to shop for their pets' medications using the company's 1-800-PetMeds number and its website.

Now what

There's no reason to anticipate that PetMed won't be able to deliver strong quarterly performances. It should also remain a relatively attractive dividend stock. PetMed's next dividend is payable on Aug. 7 and currently yields nearly 2.8%.