Petco Shares Surge Over 40% as Short Interest Hits 17% of Float
Petco delivered a 21% EBITDA increase and 77% surge in operating cash flow while free cash flow rose to $187 million in fiscal 2026. The stock jumped over 40% in the past week as short interest climbed to 17% of the float, setting up potential squeeze.
1. Q4 Performance and Profitability
In Q4, Petco reported net sales of $1.52 billion, down 2.4% year-over-year, with same-store sales falling 1.6%. Despite the sales decline, EBITDA rose 21% and operating cash flow increased 77%, reflecting improved core profitability.
2. Cash Flow and Balance Sheet Improvements
Petco generated $187 million in free cash flow for fiscal 2026, up from under $50 million the prior year. Net debt to EBITDA declined from over 4x to 3x by year-end, and the company refinanced its debt, extending maturities to 2031.
3. Short Interest and Squeeze Potential
Short sellers hold 15.54 million shares, or 17% of the float, with an 11.7-day cover ratio. The stock’s 40% rally in the past week has intensified squeeze risks as shorts may rush to cover positions.
4. 2026 Growth Plan
CEO Joel Anderson unveiled the “Reach for the Sky” strategy targeting expansion of fresh-food freezers by over 1,000 units, new national-brand and flavor launches, owned-brand growth, and scaled grooming, training and veterinary services.