During the sickness era we saw huge pet growth. That is why a lot of pet related stocks like CHWY and WOOF had such high valuations, however the past year we have seen pet ownership flat line but that does not mean it's a dud. Pet spending is still projected to grow for a while even though household ownership is expected to stay the same. According to business wire pet spending is projected to grow to 190B by 2028
Now let me list the good parts I see and why I think WOOF is undervalued
Pet Humanization: Pets have gone from domestic animals to family. Dogs have gone from being outside in the dog house to sharing a bed with you. I am sure you have noticed all the cute reels and tik toks. People LOVE their pets. I LOVE MY PET. This makes it a stickier business. Honestly it was probably the pet industry's plan all along.
Pet industry is also said to have grown during the 2008 recession. Does this mean its recession proof? No clue honestly but it's a good sign.
Let's talk about some numbers.
WOOF pulls in about 6B in revenue a year with a market cap of 1B. That's a P/S of .167, they generate 6 times their market cap in revenue.
Insider buying from the board of directors back in May. They also have a new CEO(Joel D. Anderson) coming in that has a pretty solid track record.
I believe they are trading really low because of their profit lately and how much debt they have but after digging deeper their debt is not as bad as people think. They have been steadily paying it down and over 1B of it is capital leases.
Also if you go to a certain website it will say they had a 1.2B loss last year which is pretty misleading. It was 1.2B marked as goodwill from 2015.
WOOF is not all fine and dandy but I believe they can turn around especially with the new management coming in. I don't believe the market is fairly valuing them especially. The recent earnings beat by CHWY has also given WOOF a price rise alongside them.
Good luck on your investing journeys!
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