After the closing bell yesterday, PetSmart (NASDAQ: PETM) announced that its first-quarter profit increased 12%. The results were driven by higher merchandise and service sales. PETM earned $46.3 million, or 37 cents per share -- a nickel better than last year's same-quarter results. The firm also topped Wall Street's expectations, which called for earnings of 30 cents per share. Quarterly revenue increased 9% to $1.33 billion, which fell short of the consensus estimate of revenue of $1.35 billion.
The company's merchandise sales increased 9% to $1.18 billion, with pet service sales increasing 10% to $142.8 million.
Turning an eye to the future, PETM expects second-quarter profit between 26 cents and 30 cents per share (the Street expects 29 cents per share) and full-year earnings between $1.42 and $1.52 per share (the Street expects $1.47 per share). The full-year forecast is up from an earlier forecast range between $1.40 and $1.50 per share.
While the results topped the consensus estimate, Goldman Sachs decided to downgrade the firm to "neutral" from "buy." The stock is lower in pre-market trading. The shares are marching higher, a trend that started back in November 2008. The stock has faced resistance in the $24.50 region in the past, and it is approaching this area again. A failure of this test could send the stock reeling, but the fall wouldn't be too far. PETM's 10-week moving average is advancing through the $19 region, so it could cushion the blow if PETM is rejected by overhead resistance.
While the results topped the consensus estimate, Goldman Sachs decided to downgrade the firm to "neutral" from "buy." The stock is lower in pre-market trading. The shares are marching higher, a trend that started back in November 2008. The stock has faced resistance in the $24.50 region in the past, and it is approaching this area again. A failure of this test could send the stock reeling, but the fall wouldn't be too far. PETM's 10-week moving average is advancing through the $19 region, so it could cushion the blow if PETM is rejected by overhead resistance.
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