Why Petco Stock Was a Good, Good Boy on Friday

Key Points

• The animal-targeting retailer published its latest quarterly earnings report.

• It notched a double beat; that for profitability was especially impressive.

• 10 stocks we like better than Petco Health and Wellness ›

Like a favorite cat, dog, or turtle, Petco Health and Wellness (NASDAQ: WOOF) stock was receiving a lot of love and cuddles from investors on Friday. That's because they were awfully happy about the specialty retailer's second-quarter earnings, published just after market close the previous day. They sent the stock up almost 24% in price in reaction to the news.

A tasty treat for investors

This happened despite the fact that Petco's net sales for the period actually declined on a year-over-year basis. They fell in excess of 2% to $1.5 billion, but that was entirely expected by management. It was also a slightly higher figure than that predicted by analysts, who collectively were modeling $1.49 billion.

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Image source: Getty Images.

That dip was on the back of a 1.4% fall in comparable sales for the quarter.

Petco's bottom line looked far better, as the company flipped to a generally accepted accounting principles (GAAP) net profit of almost $14 million, or $0.05 per share, from the nearly $25 million loss it suffered in the same quarter of 2024. Analysts had far more modest expectations, as the average estimate for profitability was only $0.01 per share.

In the earnings release, Petco quoted CEO Joel Anderson as saying that the first half of this year "established a solid foundation for our transformation as we continued to strengthen our economic model and improve retail operating fundamentals."

A raise in EBITDA guidance

It was a beat-and-raise quarter for Petco, as it raised its guidance for non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) for the full year. For the entirety of 2025, it's now forecasting this will range from $385 million to $395 million, on net sales down in the low-single-digit percentages from the 2024 tally.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.