Deep Dive: Paul Cerro Discusses Petco Stock (Ticker: WOOF)
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Show Notes
This week we brought back Paul Cerro from Cedar Grove Capital to discuss Petco and Chewy. Here are some questions we asked him:
How big is the pet industry? Who are some of the major players? How has the industry evolved in recent years?
Can you explain Petco’s business model and some of its history?
How are they pushing into omnichannel? Why are physical locations an advantage?
What services do they offer beyond traditional pet retail? Which of these do you see driving the most growth moving forward?
What do their unit economics look like? Is there any room for margin expansion?
How are they positioned vs. Chewy? Can you explain Chewy’s model briefly and how it differs?
Valuation: How are you valuing Petco? What sort of growth does the company need to generate? How does Petco’s valuation compare to Chewy’s?
Premortem: How could the Long Petco/Short Chewy thesis go wrong?
Disclosure: The author and podcast guests are not your financial advisors. Ryan Henderson and Brett Schafer are general partners and portfolio managers at Arch Capital. Clients of Arch Capital may hold securities discussed on this show.