NEW YORK (TheStreet) -- Consumers love their pets, and investors love making money. Put those two facts together and it's hard to ignore the profit potential in PetSmart (PETM), the largest pure-play retailer of pet products and animal care in the U.S. 

With pet-store revenue projected to grow almost 20% in the next three years, according to market research firm Statista, PetSmart, which already holds 27% share of U.S. pet-store revenue, is poised to grow even bigger, meaning higher profits for its shareholders.

The Phoenix, Ariz.-based company, which provides a broad range of pet products and in-store services including pet adoption, boarding, grooming and training, reports fourth-quarter and full-year results Wednesday before the opening bell. But waiting until after the report to buy the stock will be too late. 

PETM PE Ratio (TTM) Chart
PETM PE Ratio (TTM) data by YCharts

Just in the past seven days, analysts have raised the company's fourth-quarter earnings estimates, which are now expected to be 1-cent higher at $1.39. And this was after estimates were raised two months ago from $1.37 per share. Analysts also expect higher full-year profits of $4.44 per share, up almost 1% higher from where they were at the start of the quarter. 

But despite the optimism implied by higher projected profits, analysts have held fast to their 12-month stock price projections, which doesn't make sense. 

With shares of PetSmart trading at $82.94, near its 52-week high, the stock is essentially meeting the analysts' average target of $83. This is even though the company has matched or exceeded most of its third-quarter performance targets, including its 16% year-over-year jump in earnings per share that beat Wall Street projections by 7 cents. 

The fact that PetSmart was able to grow earnings 16% year-over-year on just a 2.6% year-over-year increase in revenue suggests that the company is not only improving efficiency, but also expanding margins. And PetSmart expects these margin improvements to continue.

In light of that, though analysts have raised their estimates, it appears they're still discounting the real profit potential of PetSmart's cost-saving initiatives, including its goal to save $200 million annually by the end of fiscal 2015. Out of that total, the company expects roughly $120 million to be realized starting this year, with the rest coming in fiscal 2016.

For the quarter that ended in January, analysts expect $1.39 in earnings per share, up 8.5% year-over-year, while revenue is projected to grow 4% year-over-year to $1.88 billion. Full-year earnings are projected to grow 10% year-over-year to $4.44 on revenue of $7.09 billion, up 2.5% year-over-year.

All told, with both quarterly and full-year earnings growing at more than twice the rate of revenue, PetSmart, which pays a quarterly dividend of 19.5 cents per share, yielding 0.94% annually, has the right profit formula. And investors looking for a category leader that knows how to make money for shareholders should buy the stock ahead of Wednesday's results.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.