Insider Buying

Insider Buying Report: PetIQ Inc (PETQ:US)

A doctor wearing blue coat and stethoscope examines a dog's eyes, as the dog stares back at the doctor
PetIQ Inc
(PETQ:US)
12 months:
-29%
Activity:
Bullish
Pattern:
Purchase from CEO/Founder
News:
Q3 results
PetIQ Inc
(PETQ:US)
12 months:
-29%
Activity:
Bullish
Pattern:
Purchase from CEO/Founder
News:
Q3 results

Top-level corporate insiders such as CEOs and CFOs tend to have the most up-to-date information on their businesses. If they’re buying company stock, it’s generally a sign that the outlook for the stock is attractive.

Here, we are going to highlight a purchase by a top-level insider at PetIQ Inc (PETQ:US). PetIQ is a pet wellness company that operates throughout the United States. It is split into three sectors – veterinary services, pet products and manufacturing. The company manufactures the majority of its products and distributes prescription medications, over-the-counter treatments, supplies and treats across the US. It’s traded on the Nasdaq Stock Exchange and currently has a market capitalization of $662 million.

PetIQ Inc: Insider Buying

Our data shows that on December 1, the CEO of PetIQ, McCord Christensen, purchased 50,000 PETQ shares at a price of $20.09 per share. This cost the insider around $1 million and increased his holding by around 700%.

The chart illustrates petiq inc' price history, with significant selling and buying events marked.

Large Increase in Holding

This trade is worth highlighting for several reasons.

Firstly, the CEO has increased his holding by a large multiple and has invested a substantial amount of money into PetIQ. This suggests he sees a lot of value in the stock at present.

Secondly, in the recent past, the CEO has been a seller of stock. This recent trade signals that the CEO’s sentiment towards the company has changed and he now believes the shares are priced too low.

It’s worth noting that Mr. Christensen co-founded PetIQ and has served as its CEO since its inception eleven years ago. His experience and time spent as the head of the company means he is likely to know the company better than anyone else. Before founding PetIQ he worked at Albertson’s where he gained extensive management and retail experience. This means he is likely to know the company’s end markets well and be able to spot changes in trends.

Record Net Sales

PetIQ achieved record net sales in the third quarter of 2021, driven by its e-commerce sales channel.

For the quarter, net sales were $210 million which was an increase of around 30% on the prior year. In the products segment, which produces 85% of sales currently, the company continued to see solid sales growth and adjusted EBITDA margin expansion. Reassuringly, as of the end of the quarter, the company had $188.2 million of liquidity.

“We are very pleased with our record third quarter results. The Product segment returned to a more normal sales cadence, and we increased market share on our core manufactured items for the third consecutive quarter this year, helping to fuel the Company’s profitability. The Services segment also had a solid quarter with double digit growth in pets per clinic and dollars per pet, despite not operating a significant percentage of our clinics due to labor headwinds. Going forward, we continue to expect the strength of our diversified business model to fuel our growth as we deliver smarter options for pet parents to help enrich their pet’s lives through convenient and affordable access to veterinarian products and services,” commented Mr. Christensen.

However, while PetIQ’s financials improved significantly compared to the year before, the company was forced to scale back its expansion plans due to Covid-19-related challenges. It has now guided that it will open 100 new wellness centers in 2021 versus its previous plans to open 130 to 170. The market didn’t like this news and the share price took a hit.

The big buy from Mr. Christensen here suggests that he remains confident about the future and that he expects the stock to bounce back. We see this insider buying as a bullish indicator.

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