Is This Small Cap Stock’s Dividend Yield Worth the Price?

Dividend investors should consider picking up shares of PETS

facebook twitter linkedin

PetMed Express, Inc. (NASDAQ:PETS) is an online pet pharmacy based in the U.S. that is licensed to dispense prescription medications in all 50 states. PETS sells prescription pet medications, non-prescription pet medications, nutritional supplements, and other health products for dogs, cats, and horses directly to consumers through their website. The small-cap company is currently valued at $461 million. PETS closed Monday at $22.08.

PetMed stock has decreased about 32% year-over-year and PETS is currently trading down 40% since reaching a 52-week high of $36.75 last June. Additionally, shares of PETS have dropped 16% year-to-date and are about breakeven over the past month. However, PetMed stock has notably recovered 15% since bottoming at a 52-week low of $19.09 in late May.

Still, PetMed stock’s valuation remains high relative to the business’s growth rate. PETS currently trades at a price-earnings ratio of 21.13 and a price-sales ratio of 1.49.

The online pet pharmacy has an excellent balance sheet with $111.08 million in cash and no debt, allowing it to continue paying its dividend yield comfortably. Moreover, PETS offers a very attractive dividend yield of 5.46% with a forward dividend of $1.20, making PetMed stock a strong buy candidate despite its high valuation.

Meanwhile, shorts have been piling on. Over the past two reporting periods, short interest has jumped more than 18%, and now accounts for 24.8% of the stock's total available float, or nearly 12 days' worth of pent-up buying power.

Options are looking affordable on PetMed Express stock, too. The security sports a Schaeffer's Volatility Index (SVI) of 55%, which sits higher than just 21% of readings from the past year. In other words, options players are pricing in relatively low volatility expectations at the moment. 


Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Schaeffer's Daily Bulletin Offer


Special Offers from Schaeffer's Trading Partners