EarningsBeats.com Digest for June 2, 2021
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Specialty retailers ($DJUSRS) have been trending higher on an absolute basis, but they've lost a ton of ground to the benchmark S&P 500 on a relative basis. Despite that relative weakness, there have been plenty of specialty retailers that have been posting solid numbers. Petco Health & Wellness (WOOF) is one of those companies. On May 20th, WOOF posted revenues and EPS that easily beat Wall Street consensus estimates. Not only
that, but they also raised FY21 guidance. They now expect to see FY21 EPS at $0.73-$0.76, 10 cents above the prior range. Sales guidance was also raised by about 4%. You wouldn't know it, however, by looking at how WOOF has traded since reporting its results and raising its guidance less than two weeks ago:
After reporting stellar results, WOOF priced a large $500 million secondary offering and the sellers forgot all about the raised guidance and focused on the dilutive effect of the offering. That could very well be setting up a solid reward to risk trade. I'd look for WOOF to turn higher from the current price. It's testing key price support from May in the 22.50-22.75 range. If this support fails to hold, then next support resides from
20.75-21.00. If it holds, however, a quick 15-20% profit back to the 25.50-26.50 level is quite possible.
Happy trading!
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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