Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of PetMed Express were looking under the weather today, falling as much as 11% after a disappointing second-quarter earnings report.

So what: The pet pharmacy came up short on the bottom line, delivering a per-share profit of $0.21 on expectations of $0.22. Revenue was up 4% to $60.5 million, edging past estimates of $60.3 million, but investors seemed to be focused on the bottom line. CEO Menderes Akdag noted that reorders increased 5.3% and that the average order size grew from $72 to $73, while profits were also helped by a decrease in advertising expense.


Now what: Considering PetMed's track record of beating earnings estimates in the last four quarters, shareholders seemed taken aback by the surprise miss. Still, the sell-off seems unwarranted for only missing earnings estimates by a penny. What seemed to put a dent into profits was the rising cost of medicine, as gross profit actually fell from a year ago. Management made no comment about that development in its release, but investors may want to see more than one quarter of results to determine whether that's a trend.  

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The article Why PetMed Express Shares Fell originally appeared on Fool.com.

Fool contributor Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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hammonddvm

Not only has gross profit fallen but the business model is broken.They are in the last phases of what was once a good business.Target has pet perscription cards..pay 50 bucks and get your perscriptions for very small amounts.-Much less than Pet Meds.
The fact that management didn't address the fall in gross profits..or the management insider selling is telling.Fool me once shame on you.fool me twice shame on me.
Its a good $11.00 stock. Take profits now before others beat you to it.
Don't chase the yield.

October 23 2013 at 9:53 AM Report abuse rate up rate down Reply