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We got our "correction" in PetSmart (PETM). And then some. I predicted PetSmart was overdue for a pull back last January. The market reacted negatively to PetSmart's earning report. After hours, PetSmart fell almost 7% on a disappointing 2013 earnings outlook. The pet company expects to earn $3.76 to $3.92, under $3.93 consensus.

A correct response to PetSmart's forecast? After all, the high end of PetSmart's range was only a penny below 2013 analyst forecasts. The quarter earnings actually beat by a penny.

Still, PetSmart sports a 20 PE. You have to keep proving your worth when you have a high valuation. PetSmart inserted serious doubt about its ability to deliver.

There were other concerns. PetSmart store comps came in light at 4.6%, under its own forecast. Going forward, PetSmart predicted 2 to 4% comp increases in 2013. Management noted 2013 would be up against tough comparisons. And its CFO spoke of weaker traffic in the quarter. Just more signs of a potential slowdown at PetSmart.

Credit Suisse hit it on the head in the call, noting the data suggested: "Hey, things are going to be a little bit slower that we'll be more conservative for 2013."

Usually PetSmart gives rosier guidance in its fourth quarter. Last year, PetSmart guided 2012 well above analyst expectations. Then, PetSmart predicted $3.02 to $3.16 beating the consensus outlook of $3.01. In its fourth quarter 2010, PetSmart gave in-line guidance for 2011 matching analyst hopes ($2.23 to $2.35 per share vs $2.32).

It could be the culprit in all this is too high expectation rather than a tough slog ahead. Either way, analysts and shareholders be warned: A little less exuberance might be warranted.

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.

Source: PetSmart's Earnings: Oops