Covetrus: Cheap During The March Crash, But Too Expensive Now (NASDAQ:CVET)

Introduction

Covetrus (CVET) has a relatively short history as a listed company. The animal health technology and services company was spun off from Henry Schein (HSIC) in 2019. The majority of its revenue is generated in the so-called supply chain services division which offers a portfolio of products and services to vets and end-customers.

Source: annual report 2019 (apologies for the bad image quality)

The company’s share price has been relatively flat since the company was floated in February 2019; but in the past six months, the share price has more than six-folded, giving it a current market capitalization of around $3B.

Data by YCharts

The company is profitable and has a positive free cash flow

Covetrus reported a total revenue of almost $1.03B in the second quarter of the year which is approximately 1.5% higher than in the same quarter of FY 2019 but as its COGS increased by

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