PetSmart Inc
. (
PETM
), the specialty retailer of products, services and solutions for
pets, has increased its quarterly dividend to 16.5 cents per share,
bringing its annualized dividend payout to 66 cents per share.
The new dividend rate reflects an 18% growth over the previous
quarterly dividend of 14 cents per share (annualized 56 cents per
share), which was paid in May 2012. As per the company, the
increased dividend will be paid on August 10, 2012 to shareholders
of record on July 27, 2012. The dividend yield based on the new
payout and the closing market price on June 18, 2012 is
approximately 1%.
Further, the company also announced a new $525 million share
buyback plan expiring in January 2014. The new authorization will
be supplementing the existing plan, under which there is $103.6
million remaining as of April 29, 2012.
Dividend increases and share buybacks are resorted to by
companies that wish to return excess cash to shareholders. Of
course, these measures can only be taken by companies such as
PetSmart, which boasts of a stable cash position and healthy cash
flows. These actions not only increase shareholders' return but
also have a positive impact on the market value of the stock.
As of April 29, 2012, PetSmart had $149.6 million in cash from
operations and incurred $36 million in capital expenditures
(reflecting a free cash flow of $113.6 million). During the
recently concluded quarter, the company repurchased $175 million
stock and disseminated $15 million in dividend payments.
The company's innovative and differentiated products and its
sustained effort to expand its portfolio of brands and assortments
have helped to deliver healthy results. In a move to boost sales,
PetSmart has collaborated with
Martha Stewart Living Omnimedia Inc
. (
MSO
) to launch different lines of pet products.
For fiscal 2012, the company expects earnings in the range of
$3.19 to $3.31 per share, while comparable store sales are
projected to increase in the mid-single-digit range, with total
sales growth of 9% to 10%. Gross margin is expected to expand by 65
to 75 basis points.
For the second quarter of 2012, the company expects comparable
store sales to increase in the mid-single-digits range, while
earnings per share are expected to be in the range of 61 cents to
65 cents.
PetSmart holds a Zacks #1 Rank, which translates into a
short-term 'Strong Buy' rating, reflecting the company's consistent
strong performance as well as its positive outlook.
MARTHA STWT LIV (MSO): Free Stock Analysis
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PETSMART INC (PETM): Free Stock Analysis Report
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