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The study shows a comparison of two mega drug stores in the United States of America. The two companies to compare are PetMed Express and Rite Aid Corporation (RAD). The work presents a brief history of the two companies, a description of the products and services they offer, and several financial ratios.
PetMed Express is a
The veterinary online pharmacy was opened in 1996 (21 years old) with a focus on pet drugs. It is a public company offering veterinary prescriptions to the public. It is also known as 1-800-PetMeds, headquartered in Pompano Beach, Florida. It is traded as a PETS under the NASDAQ as well as an S&P component. The company was identified by Dr. Marc Puleo who saw a gap in the way vet customers had problems in getting prescriptions.
Rite Aid Corporation
Rite Aid Corp (RAD) is an American drugstore having over 54 years in operations. The firm has its headquarters in East Pennsboro Township, Pennsylvania. The firm has been described as the largest drugstore operating on the East Coast. While it is a public company, it is also pending acquisition by the Walgreens Boots Alliance. The company has over 4,500 operating locations with the CEO and Chairman being John Standley. As of 2016, the company made a revenue of US$ 30.736 billion.
Description of Products and Services
The products offered by the two companies are pharmaceuticals. They prescribe medicine, PetMed Express offers pet veterinary while the RAD offers human medicine. The two firms have presence over the America with branches in major cities within all the states.
Profit for the five year (in US dollars)
Sales for the five years
Days Cash on Hand
This is calculated as: Total Expenses/365 = Expenses per day or Cash & Cash Equivalent (Balance Sheet)/ Expenses per Day
RAD days cash on hand =15.3
PetMed Express Days Cash on Hand =2.84,
PetMed can only go for 2.84 days with their cash on hand, less compared to RAD with more day’s cash on hand to pay for expenses with available cash.
It is calculated as follows, Debt Ratio = Total Liability/Total Assets
RAD debt ratio =11.98
PetMed debt ratio = 7.09m /90.28m = 0.078
A larger proportion of RAD assets are financed by debt at 11.98 as compared to 0.078 in PetMed.
Earnings Per Share (EPS).
Earnings per Share = (Earnings = Profit = Income)/ No. of shares outstanding
RAD EPS = +0.16
PetMed Express EPS =+1.02
EPS shows profitability per outstanding share. PetMed shares earned more profits at +1.02 than those of RAD at +0.16, all with positive gains.
Beta measures volatility as well as a systematic risk when compared to the market. Beta is used for CAPM- capital asset pricing model. Beta of 1 shows how the security moves with the market. A beta of 1 and above shows volatile than the market and below 1 is less volatile than the market.
Beta for RAD = 2.68, RAD security prices are more volatile than that of market. It is 168% more volatile than the market.
Beta for PetMed Express =0.63, it is below 1 and this the security prices are less volatile than the market. It is 37% less volatile.
Current Ratio = Current Assets / Current Liabilities
RAD current ratio = 1.52
PetMed Express current ratio =9.55
Current ratio shows the capacity of firm to pay debts in a year from its current assets. Both firms have more assets than liabilities, but PetMed is better suited to pay its debt comfortably than RAD.
52 Week high – 52 week low.
The 52 week high/low shows fluctuations of the stock traded. It determines stock’s current value while predicting future price trend.
RAD week high and low= 8.77/4.15, a stock price going out of the margins would call for speculation and possible sale of the stocks.
PetMed Express high and low = 23.78/17.53
Revenue Per Share
It is calculated as follows; Revenue per Share = (Revenues = Sales) / No. of shares outstanding
RAD revenue per share = +0.14
PetMed Express revenue per share =+0.19
PetMed earned more revenue at +0.19 more revenue per share than RAD at +0.14 revenue per share.
Return on Equity
Return on Equity = Net Profit / Total Equity (expressed as a percent)
RAD return on equity = 51.83
PetMed Express =25.93
RAD had higher ROE, a higher ability to generate profits from the shareholders investments than PetMed.
Return on Assets
Return on Assets = Net Profit /Total Assets (expressed as a percentage)
RAD return on assets = 1.64
PetMed Return on assets =23.76
PetMed (1.64%) had a higher efficiency in managing its assets to generate earnings as compared to RAD (23.7%).
Net Profit Margin
Net Profit Margin = Net Profit / Total Revenue (expressed as a percentage)
RAD net profit margin = +0.54
PetMed Express net margin =+8.76
PetMed made more net income from its total sales made during the year. It is also more efficient in converting sales to actual profit than RAD.
Stock Price/Book Price
Book Price = Total Equity/ No. of shares outstanding
RAD stock price/book price = 14.34
PetMed Express stock price/book price = 4.40
Probably the stock market value of PetMed is undervalued as compared to RAD at 14.34.
Stock Price/Sales per Share
Sales per share = Total Revenue / No. of shares outstanding
RAD stock price/sales per share = 0.27
PetMed Express price/sale ratio = 1.55
Price to Earnings Ratio = P/E Ratio
Current Market Price of the stock / Earnings per Share (EPS)
RAD P/E ratio = 60.05
PetMed Express P/E ratio =20.05
Market Capitalization = Current Stock Price * No. of shares outstanding
RAD market capitalization =$4.8 billion
PetMed Express market capitalization= $43.81 million
MarketWatch, Annual Financials for PetMed Express Inc., Accessed from http://www.marketwatch.com/investing/stock/pets/financials
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