The FTSE 250‘s filled with sensible progress shares proper now. And following years of underperformance, buyers can decide many of those up at bargain-basement costs.

Take retailer Pets at Residence (LSE:PETS). At round 293p per share, it trades on a trailing price-to-earnings (P/E) ratio of 16.9 instances. This is a long way beneath its five-year common of twenty-two instances.

The fee-of-living disaster has broken demand for its discretionary merchandise extra just lately. However as inflationary pressures ease, might now be the time to purchase this recovering progress share?

Within the doghouse

Pets at Residence shares slumped firstly of the yr when it downgraded income predictions for the total yr (to March).

Again then, the retailer slashed its underlying pre-tax income estimates to £132m, a end result it confirmed yesterday (28 Could). This was down 3.2% yr on yr.

Group gross sales rose 5.2% over the interval, to £1.5bn, with turnover rising 5.1% on a like-for-like foundation. Nonetheless, the corporate was hit by declining revenues as gross sales of its higher-margin equipment struggled.

At group stage, margins dropped 1.2% yr on yr to 46.8%.

Progress returning?

Nonetheless, extra steady buying and selling of late suggests the retailer may very well be turning the nook. Metropolis analysts definitely imagine Pets at Residence’s earnings column will rebound over the following couple of years. They forecast progress of 11% in each of the following two monetary years.

This displays expectations that folks can have extra to spend on their pets as inflation and rates of interest seemingly fall.

An extended interval of financial stagnation might show problematic for the FTSE 250 firm. On high of this, the enterprise additionally has to beat extreme competitors from supermarkets and on-line pet retailers to develop revenues.

However Pets at Residence’s transformation programme might assist it to supercharge turnover from this level on. Funding in branding and its digital platform is already delivering huge rewards, and the corporate just lately opened a brand new distribution centre to facilitate future gross sales progress.

The cat’s whiskers

On steadiness, I believe Pets at Residence shares may very well be a superb long-term funding, given how strongly petcare spending is forecast to proceed rising.

Sector gross sales within the UK have rocketed 150% over the previous 20 years and now whole £8bn a yr, in accordance with Pet Eager. This illustrates how we’re devoting increasingly more consideration and assets to our furry companions.

Because the revenues chart above reveals, Pets at Residence has been capable of successfully harness regular progress within the animalcare market. And a persistent rise in sign-ups to its loyalty scheme’s an excellent omen. The variety of Pets Membership members rose one other 1.6% final yr, to 7.8m.

I believe Pets at Residence is likely one of the FTSE 250’s most tasty progress shares. And at present costs, I believe it’s a cut price value critical consideration.