PETS 4.04 (+4.94%)
US7163821066Healthcare Providers & ServicesPharmaceutical Retailers

Last update on 2024-06-07

PetMed Express (PETS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Understand PetMed Express (PETS) Piotroski F-Score of 5/9 for 2023. Detailed financial analysis on profitability, liquidity, and operating efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 5

We're running PetMed Express (PETS) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

The Piotroski F-Score is a method to assess a company's financial strength on a scale of 0 to 9 based on 9 criteria relating to profitability, liquidity, and operating efficiency. PetMed Express (PETS) scored 5 out of 9. Key highlights: the company reported a positive net income of $233,000 in 2023, a significant decrease from previous years. The cash flow from operations (CFO) is positive at $27.8 million, an increase from $18.5 million in 2022. However, return on assets (ROA) dropped sharply from 0.116 in 2022 to 0.0014 in 2023. Despite no change in leverage (remains at 0), the current ratio decreased from 4.5485 in 2022 to 3.6017 in 2023, reflecting weakened short-term liquidity. The number of shares outstanding increased slightly, gross margin decreased from 0.2856 to 0.2765, and asset turnover improved slightly from 1.5031 to 1.509.

Insights for Value Investors Seeking Stable Income

With a Piotroski score of 5, PetMed Express shows mixed signals. The company has positive profitability indicated by net income and cash flow from operations, but sharp declines in ROA, a lower current ratio, and reduced gross margin raise concerns about efficiency and liquidity. Despite scoring moderately, the declining financial indicators should be carefully considered. As an investor, it may be prudent to further investigate the causes of these declines before making a decision. PetMed Express may merit cautious scrutiny if you're considering an investment.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of PetMed Express (PETS)

Company has a positive net income?

Net income, also known as net earnings, is a crucial indicator of a company's overall financial health. A positive net income suggests profitability, while a negative net income indicates losses, affecting investor confidence and company stability.

Historical Net Income of PetMed Express (PETS)

In 2023, PetMed Express (PETS) reported a positive net income of $233,000. Although this is substantially lower than previous years, it still signifies that the company did not incur losses. Historically, PETS has shown strong net income figures; for example, it reported $20,822,310 in 2008 and even reached $37,283,000 in 2019. However, the downward trend in net income, culminating in the significant drop in 2023, could be a point of concern. Nonetheless, for the purpose of Piotroski analysis, a positive net income adds 1 point, bringing a positive score in this criterion.

Company has a positive cash flow?

Positive cash flow from operations (CFO) indicates that a company’s regular business operations are generating more cash than it is using, reflecting healthy financial performance.

Historical Operating Cash Flow of PetMed Express (PETS)

Petmed Express (PETS) reported a cash flow from operations (CFO) of $27.8 million in 2023, which is positive. This marks a substantial increase from the $18.5 million reported in 2022. The positive CFO trend aligns well with the historical patterns, with the company consistently maintaining positive operating cash flow over the past 20 years, except for minor fluctuations. For instance, the CFO peaked at around $47.2 million in 2017, and despite a dip to $18.5 million in 2022, the current CFO is strong. Therefore, PETS earns 1 point for this criterion, indicating solid financial health and efficient cash generation from its core business activities. This positive trend is good and underscores the company’s operational resilience and efficiency in managing its resources over the years.

Return on Assets (ROA) are growing?

The criterion examines the change in Return on Assets (ROA) over the prior year. An increase in ROA suggests improved efficiency in generating profit from assets, making a company a potentially better investment.

Historical change in Return on Assets (ROA) of PetMed Express (PETS)

The ROA for PetMed Express (PETS) saw a stark decline from 0.116 in 2022 to 0.0014 in 2023, indicating a severe drop in the company's efficiency in generating profit from its assets. This drastic reduction is a negative signal and adversely impacts the Piotroski score. Additionally, when compared to the industry median ROA, which stands higher at around 0.2729 in 2023, PetMed Express significantly underperforms its peers. Historically, PetMed Express has had a fluctuating ROA with notable highs in 2017 (approximately 0.2948) and lows in recent years. Coupled with a relatively stable yet higher ROA median within the industry, the performance of PetMed Express in 2023 is a cause for concern.

Operating Cashflow are higher than Netincome?

Operating Cash Flow being higher than Net Income is an essential indicator as it signifies that the company is generating more cash from its operations than its accounting profits. This asserts the liquidity and operational efficiency.

Historical accruals of PetMed Express (PETS)

For the year 2023, PetMed Express (PETS) has Operating Cash Flow of $27,803,000 as compared to a Net Income of $233,000. This stark difference is significant as it indicates that the company is generating ample cash through its core operations despite its net income showing a very marginal profit. A high operating cash flow relative to net income is a positive sign and indicates financial strength and efficiency in managing cash flows. Hence, a point is added for this criterion.

Liquidity of PetMed Express (PETS)

Leverage is declining?

Change in Leverage analyzes the degree to which a company is financing its operations through debt versus wholly-owned funds and is vital in assessing financial risk.

Historical leverage of PetMed Express (PETS)

PetMed Express, Inc. (PETS) observed a leverage of 0 in both 2022 and 2023. This indicator suggests that the company has maintained a debt-free financial structure for over two decades. From the given data, it's clear that leverage remains unchanged, resulting in no additional point awarded under this criterion. Therefore, no adverse trend accompanies this criterion.

Current Ratio is growing?

Compare the Current Ratio of 3.6017 in 2023 with the Current Ratio of 4.5485 in 2022 and check if Current Ratio increased or decreased. This metric is essential to assess a company's short-term liquidity.

Historical Current Ratio of PetMed Express (PETS)

In 2023, PetMed Express (PETS) reported a Current Ratio of 3.6017, a significant decrease from the 2022 figure of 4.5485. While analyzing trend structures is critical, this decrease suggests a weakening short-term liquidity position. Historically, the company's Current Ratio has experienced substantial variances - with values as high as 12.2036 in 2010 and as low as 1.8969 in 2003. In 2023, their ratio still lies significantly above the industry median of 1.2028, underscoring their advantageous liquidity position relative to peers despite the year-over-year decline. Given that the Current Ratio has decreased, we allocate 0 points for this criterion as the trend reveals deteriorated liquidity on a year-to-year basis, albeit still superior within the industry context.

Number of shares not diluted?

The criterion checks the change in the number of shares outstanding. A decrease would indicate share buybacks, often seen as a positive signal.

Historical outstanding shares of PetMed Express (PETS)

The Outstanding Shares for PetMed Express increased from 20,176,000 in 2022 to 20,275,000 in 2023. Therefore, the trend receives a score of 0. Over the last 20 years, the number of outstanding shares has fluctuated but has generally shown an increasing trend. Share buybacks were noticeable between 2008 to 2010 and before 2020. This may signify that recent management has either not prioritized buybacks or has used cash flows for other purposes, possibly growth investments or other internal developments.

Operating of PetMed Express (PETS)

Cross Margin is growing?

Gross Margin measures a company's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. An increasing gross margin indicates improved profitability and efficiency.

Historical gross margin of PetMed Express (PETS)

In 2022, PetMed Express reported a gross margin of 0.2856, which decreased to 0.2765 in 2023. This 0.0091 decline in gross margin indicates a reduction in profitability and cost efficiency for the company in the given period. This dip might reflect increased costs of goods sold or other operational challenges. Analyzing a longer trend, the company has generally seen declining gross margins over the past 20 years, from a high of 0.4267 in 2003 to current levels, suggesting long-term challenges. However, compared to the industry median gross margin, which was 0.2729 in 2023, PetMed's gross margin remains marginally higher. Despite outperforming the industry median slightly, the declining trend and the specific year-over-year decrease in 2023 suggest a 0 point score in this criterion for the Piotroski Analysis.

Asset Turnover Ratio is growing?

Asset Turnover measures the efficiency with which a company uses its assets to generate sales. An increasing Asset Turnover ratio is a positive indicator of improving operational efficiency.

Historical asset turnover ratio of PetMed Express (PETS)

In 2023, the Asset Turnover ratio of PetMed Express (PETS) is 1.509, which is a slight increase from the 1.5031 reported in 2022. This suggests an improvement in the company's efficiency in utilizing its assets to generate revenue. Over the past 20 years, PetMed Express has shown a generally declining trend in its Asset Turnover, from a high of 8.0372 in 2003 to a low of 1.5031 in 2022. Despite this long-term decrease, the recent uptick is a positive sign. Therefore, following the Piotroski F-Score criteria, a point is added for this improvement in asset efficiency.


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