The uniqueness of The Original Bark Company’s (NYSE:BARK) offerings, the strength of its sector, and its reasonable valuation make me bullish on BARK stock. The Original Bark owns and operates an e-commerce website for dog owners (or dog parents, if you’d prefer) called BarkBox.
Also making me upbeat on the shares are the company’s total devotion to dogs, its strong growth, and the fact that it’s relatively close to being profitable.
Unlike its top competitors like Amazon (NASDAQ:AMZN) and Chewy (NYSE:CHWY), BarkBox, as its name indicates, specializes in providing pre-made boxes for its customers. In other words, instead of dog owners choosing from many different products, BarkBox’s headline offering, which is simply called Box, consists of toys and treats selected by the company each month. (However, according to InvestorPlace columnist Luke Lango, the contents are “personalized” for each dog.)
That approach, I believe, should be effective for new dog owners who do not yet know a great deal about what their companions like and how to care for them. And because many consumers became first-time dog owners during the pandemic, it’s a good time to be marketing such a service.
Also quite differentiated is the food section of BarkBox’s website. That’s because the website enables dog owners to provide detailed information about their pets’ medical conditions and communicate with a wellness advisor to help build a meal plan for their pooches. Again, that unique feature is a good feature for the many new dog owners in the U.S. and other countries.
Finally, the third box mentioned on BarkBox’s list of boxes on its home page is called Bright. This box consists of dental products that are supposed to improve dogs’ breath and their oral hygiene.
I’ve never seen another e-commerce website emphasize dogs’ dental needs to such a great degree. I know that my family’s veterinarian is very intent in making sure that we brush our dog’s teeth regularly. I’m certain that canines’ oral hygiene is very important for their health, just as it’s critical for humans’ health. So, I believe that BarkBox’s unique emphasis on dental hygiene will serve it very well going forward.
A Reasonable Valuation and the Sector’s Strength
BARK stock is trading for just 2.6x analysts’ average sales estimate for this year. That’s not a high valuation for a company that, as I’ll show a bit later, is growing rapidly and is not very far away from profitability.
Numerous other columnists have thoroughly and eloquently described the strength and rapid growth of the pet sector. For example, InvestorPlace’s Lango, noting that “pets are becoming humanized,” reported that pet care spending has risen over 100 since 2010. Globally, pet sales are projected to increase more than 50% over the next five years.
Growth, Profitability and Total Devotion to Dogs
Lango noted that BarkBox’s subscriber base jumped 1,200% from 80,000 paid subscribers in 2014 to 1.1 million paid subscribers recently. That’s very impressive growth, which indicates that most consumers like and retain their subscriptions with the company.
Meanwhile, indicating that the company is doing well financially, its top line surged from $191.4 million in the year that ended March 2019 to $378.6 million in the year that ended in March 2021.
And on the profitability front, The Original Bark Company’s operating income rose to -$20.6 in its last reported fiscal year from $34.7 million in 2019. The $20.6 million operating loss in the last reported fiscal year suggests that the company is a year or two from generating positive operating loss.
Finally, unlike Amazon and Chewy, BarkBox is totally devoted to dogs. I think that fact will favorably impress many dog owners.
The Bottom Line on BARK Stock
The company’s favorable strategies, rapidly growing sector, reasonable valuation and strengthening financial results make it a buy in my book for growth investors.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article.