For this week’s StockPointer content analysis (attached) we’ll be looking at PetSmart (PETM), a company we added to our US-Large model portfolio on December 1st. 
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PetSmart’s economic performance has been growing for the last 5 years, seeing NOPAT (net operating profit after tax) increase from $339M in 2010 to $583.5M in 2014, all while maintaining invested capital at around $3.2B over the same period. Along with NOPAT, return on capital has climbed from 10.6% to 18.4%; while cost of capital has remained stable at, or below, 7.7% for the last 5 years. The result of PETM’s improving economic performance has been a stable increase in its TTM EVA since January 2010.
PETM is trading very close to its intrinsic value, with a P/IV ratio of 0.98 (a multiple mildly more attractive than its 5-year average of 1.05). In line with historical levels, PetSmart’s FGV/EV is at 16.6%, which reflects a premium to its future growth.
Finally, from an accounting perspective, PETM has grown its dividend by more than 10% per year over the last 5 years, repurchased common shares, and generated positive, stable FCF.
