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PetSmart, Inc. Message Board

  • yahoo yahoo May 10, 2005 5:43 PM Flag

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    • That's why I think the slight increase on Friday is a dead cat bounce.

    • So you're a Peter Lynch prostelyte?

      I tend
      to favour cash flow analysis as it wraps a company
      up in a nice tight little valuation that you can
      check using several different methods.

      Running
      exclusively with earnings multiples can leave holes. But the
      cash flow doesn't lie, and in the end it all comes
      down to how much cash an entity can generate.


      As far as figuring out what's going on with
      depreciation and ammortization charges, that's why my middle
      initials are M, D, & A.

      By the way; What firm were
      you trading for? In NY or regional?

    • I've been pure equities for 20 years..I rarely
      trade bonds, only on very severe sentiment
      measurements. Sentiment is one "metric" I use to buy/sell...the
      sentiment on PETM(and retailing) is becoming increasingly
      bearish..to me it becomes more attractive, the more people
      become bearish.

      Quantitatively, you could buy
      PETM based on the PE/growth rate "metric"...lets say
      that PETM estimates only lowered slightly to $.35 this
      year and $.50 next year (down from $.40 and $.56). A
      common approach on the conservative side is to take half
      the EPS growth rate (25) times next years
      estimate..$12.50.

      An aggressive valuation is the full growth rate (50)
      times the next years estimate...$25. Obviously not a
      "cash flow method", but one that has worked for me over
      the years.

      My discomfort with
      depreciation/amortization is based on wether somes expenditures become
      assets or costs. Secondly, AOL was an example of the
      leeway afforded certain amortizations...costs per
      subscriber were being amortized over five years, but their
      subscriber turnover was 50% annually...a very simplistic
      example but you get my drift.

      I would say good
      luck with your cash flow analysis, however I must add
      that I hope you don't get a chance to buy any at your
      price.


      Mollysback...thanks for the words of encouragement regarding the tone
      of my reply. I've seen too many boards temporarily
      ruined by a running feud over nothing but testosterone.

    • <EOM>

    • Obviously you never worked either on a bond
      trading desk or in a high yeild department or your
      opinion about EBITDA would be markedly different. (The
      Lord came to me in a dream and said; "Let there be
      FASB." And then there was FASB. And it was good. And
      FASB begot GAAP. And GAAP was good. And GAAP tamed the
      mighty demons Ammortus and Deprecos, bringing peace to
      the land.) I might credit you with having worked on
      an arbitrage desk but all those people are insane
      anyway.

      As far as recent bond pricings have you
      followed any bond issues for anything in the hotel
      industry? Even the blue chip types? 500-600 basis points
      over LIBOR just to start. And quite frankly PETM will
      have more econ related issue than anything in the
      hotel industry where margins are much fatter.


      So what's your "metric" as you put it? I posted my
      numbers. What are you looking at that us cash flow
      blood-hounds missed?

    • balatta, you seem like a good person. You handled
      your response with dignity. We need more posters on
      this BB, like you, that ad to the overall
      maturity.

      I always thought that any debt rated below an "A"
      was considered junk bond quality. There are an awfull
      lot of very good companies that carry a BBB
      rating.

      Good luck
      Molly

    • I'm aware of what EBITDA is, and have never
      really been impressed by it, as both depreciation and
      amortization are numbers that can be misleading, depending on
      the type of business you're in, and the rate of
      growth.

      I'd appreciate a few examples of other "credit
      worthy" companies that have sold debt priced as
      "junk".

      I've worked on several institutional trading desks and
      know that when a PM decides to eliminate a position,
      they tend to just "blow it out"...in many instances
      this creates a buying opportunity. Coincidentily the
      retail sector itself is under increased selling pressure
      by institutional holders.


      I was an
      investor in PETM before it went public. I sold on the way
      up to $40 originally because wall street became
      overly enthusiastic regarding "big-box" retailing. I
      believe PETM had to do exactly what they are trying to
      accomplish...cut costs, consolidate their U.S. store base, punt
      the U.K. operation (even close it outright if
      necessary) and explore any opportunities in "e-commerce".


      Almost any valuation method you use has some subjective
      component.The institutions that are selling are raising cash to
      redeploy to areas they find more appealing. The
      institutions that are buying are probably attracted based on
      some type of valuation metric..and tend to be more
      patient regarding the efforts to transition the company.
      I am currently in the latter camp..time will tell.

    • Do you feel better, now that you got that off your chest?

    • My cats eat and crap the same as last year, and
      their consumption remains steady. Unless I start
      feeding the dog next door.
      You guys are all WET WET
      WET.....I'll buy all what you do not want.Fickle irrationale
      fanatics of the markets Profs. Graham and Dodd called you
      all. Take you EBITA and stuff it where the sun dont
      shine they had none for several quarters. NOW they have
      some you Bozo. Focus on the facts......You could not
      identify value and a turnaround if it smacked you in the
      face.....Go buy Amazon and Yahoo for a while... so you can
      batter that badboy too.

    • PETM is a specialty retailer. Right now this area
      is just getting hammered as personal consumption in
      the US comes down. When personal consumption falls
      it's usually the specialty retailers that feel it
      first.

      If PETM has even a slight downward flinch
      on their top line, with their low operating margins
      they are going to get absolutely hammered. (We've
      already seen some of this.) With a projected slow down in
      the economy through the end of the year, institutions
      are probably looking to dramatically reduce their
      exposure to this side of the market. Which is why I can't
      see anyone trading this company based on earnings
      multiples.

      And actually I don't hate Leaf (he could
      sure throw the bejezus out of the ball up at WSU) but
      it seems as if he needs to get his head screwed on
      straight. Maybe we could all chip in and buy him some
      prozac?

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PETM
67.85-0.29(-0.42%)11:32 AMEDT

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