Petco Health and Wellness Company, Inc. (NASDAQ: WOOF) Faces Legal and Financial Challenges

• Petco is under investigation by law firms for potential breaches of fiduciary duties and federal securities laws, impacting long-term shareholders.
• A class action lawsuit alleges Petco made false and misleading statements about its business sustainability, affecting investors.
• Financially, Petco shows signs of strain with a negative P/E ratio of -13.26 and a debt-to-equity ratio of 2.64, indicating potential liquidity issues and heavy reliance on debt.

Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) is a well-known retailer in the pet care industry, focusing on products and services that enhance the lives of pets and their owners. As a key player in the market, Petco competes with other major retailers like PetSmart and Chewy. On August 28, 2025, Petco is set to release its quarterly earnings, with Wall Street estimating an earnings per share of $0.01 and projected revenue of approximately $1.49 billion.

Despite these projections, Petco faces significant challenges. Johnson Fistel, PLLP, a stockholder rights law firm, has launched an investigation into certain board members and executive officers of Petco. This investigation centers on potential breaches of fiduciary duties and violations of federal securities laws, which could have serious implications for long-term shareholders. Investors who have incurred losses exceeding $100,000 have the opportunity to lead a securities fraud lawsuit, as highlighted by the Rosen Law Firm.

Additionally, Berger Montague, a securities litigation law firm, is investigating potential securities law violations involving Petco. A class action lawsuit has been filed on behalf of investors who acquired Petco securities between January 14, 2021, and June 5, 2025. The lawsuit alleges that Petco made materially false and misleading statements about its pandemic-related tailwinds and the sustainability of its premium pet food business model. Investors have until August 29, 2025, to seek appointment as lead plaintiff representatives.

Financially, Petco is experiencing challenges. The company has a negative price-to-earnings (P/E) ratio of approximately -13.26, indicating current losses. Its price-to-sales ratio is 0.15, suggesting the stock is undervalued compared to its sales. The enterprise value to sales ratio is 0.61, providing insight into the company's valuation relative to its revenue. However, the enterprise value to operating cash flow ratio is 21.59, indicating limited coverage of the enterprise value by operating cash flow.

Petco's financial health is further strained by an earnings yield of -7.54%, reflecting negative earnings performance. The company is heavily leveraged, with a debt-to-equity ratio of 2.64, indicating significant reliance on debt for financing. Additionally, the current ratio is 0.85, which may suggest potential liquidity issues, as it falls below the standard threshold of 1. These financial metrics highlight the challenges Petco faces in maintaining its market position and financial stability.