Transferring Coverage: Outlook Intact; Earnings Growth Needed for Re-Rating

Research evidence excerpt

Transferring Coverage: Outlook Intact; Earnings Growth Needed for Re-Rating

TD Cowen Pet Valu Holdings Ltd.

Global Research May 13, 2026

AT A GLANCE

Our Investment Thesis Forthcoming Catalysts

We like PET's leadership position in the Canadian Pet Industry — seen MSD% CAGR long-term — Q2/26 results expected on August 11.

and significant potential for operating leverage stemming from its $100M DC modernization/

expansion that took 4 years to complete but supports another decade of growth. Pet Valu's

focus on devoted pet lovers (who prefer premium feed), its leading market share, significantly

larger store count, investments in the culinary segment, and disproportionate exposure to rural/

suburban markets have it well positioned to gain further market share over the coming years.

Following the recent pullback, PET is trading at 10.4x our NTM EPS, trough level since its IPO and

among the lowest of its peer group of higher-growth retailers (14x-30x), franchisors (13x-26x),

and Canadian grocers (13x-23x). While the shares could remain range-bound before seeing

meaningful earnings improvement in H2/26, valuation is attractive for a capital-light long-term

growth story with solid FCF over the forecast horizon.

Base Case Assumptions Upside Scenario Downside Scenario

SSSG of 0.6%/1.9%, 40/40 net new stores, Earlier-than-expected recovery in pet An extended downturn in consumer health

and adjusted EBITDA margin -80bps/+20bps adoption and consumer health leading to that forces more pet owners to cut back on

in 2026/2027. SSSG returning to historical MSD% CAGR, the quality/quantity of food/treats that they

normalization of fuel prices, and/or better- provide their pets; increased competition,

than-expected benefits from new supply and economic conditions that delay new