PETM Facing Higher Competition From Discounters

Analysts at Pali maintained “neutral” rating on PetSmart (NASDAQ: PETM).

PETM posted its Q3 earnings per share at $0.31, beating the estimates and the guidance. PETM’s sales and operating margins for the quarter were in-line with the estimates. According to Pali, PETM’s results benefited from lower tax rate, buybacks and higher-than-expected income from the company’s investment in Banfield.

Pali mentioned that PetSmart is not benefiting from food inflation anymore and it is facing higher competition from the discounters. Pali believes that the company is efficiently doing the job of battling discounter competition. According to Pali, PETM’s earnings growth is dependent on a recovery in the demand for discretionary hard goods.