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BlackEarth Minerals’ Stock Zooms Over 59% Today, Do You Know Why?

  • March 31, 2020 08:13 PM AEDT
  • Team Kalkine
BlackEarth Minerals’ Stock Zooms Over 59% Today, Do You Know Why?

Summary

  • For numerous countries, the extraordinary life changes brought about by the coronavirus restrictions led to the replacement of FOMO by FOGO – the Fear Of Going Out.
  • In the COVID-19 era, individuals have made dogs and cats more significant part of their family, noting a surge in the ownership of pets. This upsurge has garnered the attention of the investors towards the growing pet humanisation trend.
  • Two of the US based hot pet stocks such as Chewy and Freshpet are accelerating growth and customer base. Furthermore, the companies are well-positioned to sweep the market with increased sales momentum and an encouraging FY20 guidance.

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It is often said dogs are human’s best friend. This statement holds true in COVID-19 pandemic era that has brought people together with their furry friends like never before.

Despite the fact that numerous folks are juggling with their household chores and work from home during the day, they are up for their “stress busters” at any time.

The COVID-19 pandemic has turned individuals into pet-craving souls

Owing to COVID-19 induced shutdown, people are unable to expand their social ‘bubbles’ to reconnect with their family and friends. Individuals are increasingly relying on the love of their four-legged friends to reduce the feeling of loneliness, mental distress and social isolation.

It seems a win-win for both people and pets

During the era of physical distancing, pets have been doing pretty good with the increased attention and belly-rubbing from their owners.

The shelter-in-place phase of the pandemic has made people love their pets, pamper them and spend liberally on their wellbeing.

Did you read; Prescription of Mental Health Medications Surges Amid COVID-19

Numerous reports suggest that these furry friends not only brighten up the day, amid technology-based video calls via Zoom in this remote working phase, but they are also believed to make an individual happy, healthy, less stressed and more productive at work.

Don’t worry if you don’t have a pet at home. You can still boost your day, mood, and energy by simply watching videos of pets available online.

This increasing trend of the fostered relationship between human and a pet has not only soared spending by the individual; it has surged the revenue for numerous businesses selling pet-related products. Additionally, these swelled revenues of the businesses are grasping the attention of the investors.

With this backdrop, let us quickly take a peek at two of the global pet companies:

Chewy, Inc. (NYSE:CHWY)

Owing to COVID-19 induced shutdowns and flocking of the people to e-commerce companies to buy and pay for the stuffs online securely and hygienically, it is easy to see why the business of Chewy, the online retailer of pet supplies is booming.

The Company is making the process smooth for individuals to stock up on pet food, toys, and other necessities with its digital marketplace.

Also read; E-commerce Emerges as Winner from COVID-19 Turmoil

Financial Performance

On 9 June 2020, Chewy unveiled its first-quarter results and noted a robust performance for the period ended 3 May 2020 and highlighted that its business achieved net sales of US$1.62 billion reflecting a y-o-y increase of 46%, driven by swelled customer base and net sales per active customer.

Furthermore, Chewy’s gross margin was enhanced by 50 basis points (bps) y-o-y primarily due to growing sales of the Company’s private label and pharmacy businesses. However, enlarged freight and logistics investments because of coronavirus took a toll on the profitability, declining the gross margin by 120 bps in the quarter.

Chewy’s adjusted EBITDA witnessed an upsurge of 122% y-o-y and stood at US$3.4 million. Notably, the Company achieved a significant milestone by delivering its first-ever quarter of adjusted EBITDA profits.

Moreover, Chewy added a record 1.6 million net active customers in Q1 FY20, fetching total active customers to 15 million. Also, net sales per active customer increased by 6.6% to US$357.

Chewy’s Autoship subscription program offering its customers flexibility to replenish their pet food and treats automatically at set intervals witnessed a substantial y-o-y increase of 48% and reached US$1.10 billion.

Outlook

The Company expects net sales in the Q2 to be in the range of US$1.62 billion - US$1.64 billion, which represents surged y-o-y growth of 40% to 42%. Furthermore, Chewy anticipates FY20 sales to be between US$6.55 billion to US$6.65 billion.

On 13 August 2020, CHWY settled the day’s trade at US$54.62, up by 2.77% from the previous close. Market capitalisation of the Company stood at US$21.34 billion, with ~401.56 million shares outstanding.

Freshpet, Inc. (NASDAQ:FRPT)

The Company produces and markets natural fresh meals and treats for dogs and cats to major retail classes comprising of grocery (including online platform), mass and club, pet speciality, and natural retail throughout the US and other foreign markets.

Financial performance

On 3 August 2020, the Company announced its bolstered business performance, with net sales standing at US$80.0 million, witnessing an increase of 33.2% y-o-y for the Q2 FY20 period ended 30 June 2020. The boosted net sales were driven primarily by innovation, velocity, and distribution gains.

Furthermore, the Company noted a net income of US$0.2 million during Q2 FY20 as compared with a net loss of US$5.7 million during Q2 FY19. The increment in net income was due to swelled net sales and enlarged gross profit, partly offset by surged SG&A of US$33.7 million.

Notably, Freshpet’s adjusted EBITDA witnessed an increment of 833.3% of US$11.2 million for Q2 FY20 in comparison with adjusted EBITDA of US$1.2 million for Q2 FY19.

The Company has bolstered balance sheet with cash and cash equivalents of US$107.7 million and short-term certificates of deposits of US$20.0 million, with no outstanding debt, as of 30 June 2020.

Outlook

Freshpet’s FY20 guidance is encouraging. The Company expects the following for FY20:

  • Net sales are anticipated to exceed US$320 million, representing a growth of 30% from FY19.
  • Adjusted EBITDA is projected to exceed US$46 million, noting a surge of greater than 57% over FY19.

On 13 August 2020, FRPT settled the day’s trade at US$106.21, up by 3.51% from the previous close. Market capitalisation of the Company stood at US$4.30 billion, with ~40.47 million shares outstanding.

 

 


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