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PetSmart, Inc. (PETM), Petmed Express Inc (PETS), VCA Antech Inc (WOOF): The Surprising Economic Consequences of Owning a Pet

Man’s best friend is quickly becoming America’s hairy stepchild.

And although this shift is good news for the pet supply industry, it also may have some frightening long-term economic consequences — ones that are currently playing out in other pet-obsessed countries.

Spending on our furry friends
The pet market in America is massive. All told, $53.33 billion was spent on purchasing, feeding, medicating, caring for, boarding, and grooming pets last year alone, according to the American Pet Products Association. This total has doubled since the late ’90s, despite two recessions.

The following publicly traded companies have, no doubt, noticed as this growing trend has played out in their improving financials. With the exception of one company, investors have also taken notice:

Company What It Does 5-Year Earnings Compounded Annual Growth* 1-Year Earnings Compounded Annual Growth* 5-Year Stock Return
Petmed Express Inc (NASDAQ:PETS) Runs 1-800-PetsMeds, a pharmacy for pets. (2.4%) 3.5% 10.3%
Central Garden & Pet Co (NASDAQ:CENT) Produces pet supplies, such as edible bones, collars, and leashes. (10.1%) 9.7% 64.4%
VCA Antech Inc (NASDAQ:WOOF) Provides veterinary services and diagnostics. (0.8%) 0.2% (1.1%)
PetSmart, Inc. (NASDAQ:PETM) Operates the retail stores that sell pet supplies and food. 14.8% 28.1% 254.9%

All data from S&P Capital IQ. Returns from Google Finance .
*Based on normalized earnings.

But what’s perhaps even more shocking, pets now outnumber children 4-to-1 in America, according to Jonathan Last in his new book, What to Expect When No One’s Expecting. Commenting on this statistic, he writes, “the evidence suggests that pets are increasingly treated like actual family members.”

He backs his statement up with the bizarre — but completely true — reality that auto insurance companies offer add-on policies for when pets are traveling in your car, and that a recent Congressional bill proposed that citizens receive a $3,500 tax break for pet-care expenses.

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