Validea Kenneth Fisher Strategy Daily Upgrade Report: GMS and Petco Health and Wellness Company Receive Upgrades

GMS INC (GMS) and PETCO HEALTH AND WELLNESS COMPANY INC (WOOF) have been upgraded to 80% and 70% interest, respectively, based on Kenneth Fisher's Price/Sales Investor model. GMS operates a network of over 320 distribution centers, while WOOF is a pet health and wellness company. Both stocks have met several criteria, including low P/S ratios, long-term profit growth, and consistent profit margins. However, GMS has failed to meet the free cash per share and three-year average net profit margin tests. WOOF has not been explicitly tested against these criteria.

In the retail sector, two companies have caught the attention of investors based on Kenneth Fisher's Price/Sales Investor model. GMS Inc. (GMS) and Petco Health & Wellness Company Inc. (WOOF) have been upgraded to 80% and 70% interest, respectively. Both companies have demonstrated strong performance metrics, including low P/S ratios, long-term profit growth, and consistent profit margins. However, GMS Inc. has failed to meet the free cash per share and three-year average net profit margin tests, while Petco has not been explicitly tested against these criteria.

GMS Inc. (GMS)

GMS Inc., operating a network of over 320 distribution centers, has been upgraded due to its strong financial metrics. The company has shown a low P/S ratio, long-term profit growth, and consistent profit margins. However, it has not met the free cash per share and three-year average net profit margin tests, which are critical for investors seeking robust financial stability. Despite these shortcomings, GMS Inc. has managed to obtain clearance from the Canadian Competition Bureau for its proposed acquisition of GMS, indicating a strategic move to expand its market presence [1].

Petco Health & Wellness Company Inc. (WOOF)

Petco Health & Wellness Company Inc. (WOOF), a pet health and wellness company, has also received a significant upgrade based on the Price/Sales Investor model. The company has shown strong performance in key areas, including low P/S ratios, long-term profit growth, and consistent profit margins. Petco's Q2 2025 earnings report highlighted a 36.4% surge in adjusted EBITDA to $113.9M, driven by margin expansion and cost cuts. However, the company faces challenges, such as a lagging e-commerce platform and ongoing net income losses, which could impact its long-term sustainability [2].

Conclusion

Both GMS Inc. and Petco Health & Wellness Company Inc. offer compelling investment opportunities in the retail sector. While GMS Inc. has demonstrated strong financial performance, it has yet to meet certain critical financial metrics. Petco, on the other hand, has shown significant improvements in profitability but still faces challenges in areas like e-commerce and net income stability. Investors should closely monitor these companies' performance and strategic moves to determine their long-term investment potential.

References

[1] https://seekingalpha.com/news/4490520-home-depot-gms-deal-gets-clearance-from-canadian-competition-bureau
[2] https://www.ainvest.com/news/petco-strategic-turnaround-margin-expansion-operational-discipline-drive-sustainable-recovery-2508/