Should you own Petco Health and Wellness Company (WOOF)?

Baron Funds, an investment management firm, has released its Q3 2022 “Baron Discovery Fund” investor letter. A copy of it may be downloaded here. Compared to the benchmark Russell 2000 Growth Index, which was slightly positive, the fund (institutional stocks) was flat in the third quarter. Additionally, please see the fund’s top five holdings for its top picks in 2022.

In the third quarter letter, Baron Funds discussed stocks like Petco Health and Wellness Company, Inc. (NASDAQ:FRAME). Based in San Diego, California, Petco Health and Wellness Company, Inc. (NASDAQ: WOOF) is a pet health and wellness company. On October 28, 2022, shares of Petco Health and Wellness Company, Inc. (NASDAQ: WOOF) closed at $10.62 per share. The one-month return of Petco Health and Wellness Company, Inc. (NASDAQ: WOOF) was -7.84% and its shares have lost 57.06% of their value over the past 52 weeks. Petco Health and Wellness Company, Inc. (NASDAQ: WOOF) has a market capitalization of $2.822 billion.

Baron Funds made the following comment about Petco Health and Wellness Company, Inc. (NASDAQ: WOOF) in its Q3 2022 letter to investors:

Petco Health and Wellness Company, Inc.. (NASDAQ: WOOF) is a pet supply retail chain. Shares fell in the quarter as the company reported earnings that fell short of analysts’ expectations. Strong sales in pet food and pet services (two categories that tend to be less discretionary) were more than offset by weaker than expected sales in non-essential supplies and pets (which tend to be more discretionary). Given management’s expectations of continued weakness in consumer spending, the company lowered its profit forecast for the rest of the year. While pet food and pet services have a higher lifetime value for Petco, these categories also have a lower margin and therefore the mix shift to these categories will be a drag on profitability in the short term. term. Despite these short-term challenges, we remain optimistic about Petco’s long-term growth prospects. Weakness in supply and pets has been temporary during past economic downturns and therefore is expected to rebound in the coming quarters. At the same time, the services continue to do well as the company expands its veterinary practices. Finally, Petco’s new store concept targeting rural communities is off to a good start, paving the way for a second growth concept in the future.

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Petco Health and Wellness Company, Inc. (NASDAQ: WOOF) is not on our list of 30 most popular stocks among hedge funds. According to our database, 21 hedge fund portfolios held Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) at the end of the second quarter, up from 23 in the prior quarter.

We discussed Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) in another article and shared the list of the best young stocks to buy and hold over the next 20 years. Additionally, please see our Letters to Hedge Fund Investors Q3 2022 page for more letters from hedge fund investors and other leading investors.

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Disclosure: none. This article originally appeared on Insider Monkey.

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