This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Petco Guidance Disappoints

Shares of Petco (PETC) fell Friday after the company guided first-quarter net income lower, piquing the concern of analysts.

The guidance took the shine off the company's fourth quarter, in which earnings rose 29%, excluding items, beating the Wall Street consensus.

CIBC World Markets analyst Dan Wewer cut Petco's investment rating to sector performer from sector outperformer. The analyst said he is cautious on the company's future same-store sales in 2004 and sees likely EPS deceleration to up 21% in 2004, compared with a 31% rise in 2003. Wewer also discontinued his $36 price target.

"We are more conservative given slower same-store sales momentum while expenses are rising," Dewer said in a research note Friday. He noted that same-store sales at the company increased 5.6% in 2003, compared with an 8% rise in 2002. (CIBC World Markets does investment banking for Petco and also makes a market in the company's shares.)

Legg Mason analyst David Schick agreed, saying the company's same-store sales increase in the fourth quarter of 5.6% represents a slowdown because it compared with a 6% rise in the fourth quarter of 2002. He had been expecting a 6.8% increase.

"Petco's fourth-quarter results were solid but slightly disappointing relative to bullish expectations," said Schick, who has a hold rating on the company. "It now seems more imperative that Petco show some comp acceleration against easier first-quarter 2003 comparisons." (Legg Mason makes a market in Petco's securities.)

The shares were lately down $1.19, or 3.8%, at $29.91 after falling as much as 7% in Friday premarket trading.

Petco said Thursday after the bell that it sees it sees first-quarter earnings at 24 cents to 25 cents a share, with same-store sales increasing 5% to 6% in the first quarter. Analysts, however, were calling for 26 cents a share. The company earned 19 cents a share in the prior-year period.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $123.93 -0.25%
FB $83.58 0.69%
GOOG $553.72 -0.26%
TSLA $187.03 -1.80%
YHOO $45.48 2.30%


DOW 17,704.46 +26.23 0.15%
S&P 500 2,057.62 +1.47 0.07%
NASDAQ 4,882.1770 +18.8150 0.39%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs