Petco Health and Wellness Company, Inc. Just Recorded A 62% EPS Beat: Here's What Analysts Are Forecasting Next

Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 4.9% to hit US$1.4b. Petco Health and Wellness Company also reported a statutory profit of US$0.28, which was an impressive 62% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Petco Health and Wellness Company after the latest results.

Check out our latest analysis for Petco Health and Wellness Company

Taking into account the latest results, the most recent consensus for Petco Health and Wellness Company from eleven analysts is for revenues of US$5.69b in 2022 which, if met, would be a modest 4.5% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 111% to US$0.71. In the lead-up to this report, the analysts had been modelling revenues of US$5.59b and earnings per share (EPS) of US$0.56 in 2022. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the considerable lift to earnings per share expectations following these results.

There's been no major changes to the consensus price target of US$26.10, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Petco Health and Wellness Company analyst has a price target of US$31.00 per share, while the most pessimistic values it at US$15.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Petco Health and Wellness Company's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 9.3% growth on an annualised basis. This is compared to a historical growth rate of 19% over the past year. Compare this to the 129 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 9.7% per year. So it's pretty clear that, while Petco Health and Wellness Company's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Petco Health and Wellness Company following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$26.10, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Petco Health and Wellness Company going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for Petco Health and Wellness Company (1 shouldn't be ignored!) that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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