After the market closed Thursday, Petco (NASDAQ: WOOF) published its fiscal third-quarter results, with sales and earnings that beat Wall Street’s expectations. As a result, the specialty retailer’s stock is seeing big gains in Friday morning trading, up 19.8% as of 10:30 a.m. ET.

Petco posts better-than-anticipated Q3 sales and profits

For the period, which ended Nov. 2, Petco posted a non-GAAP (adjusted) loss of $0.02 per share on revenue of $1.51 billion in the third quarter. For comparison, the average analyst’s estimate had called for the business to post an adjusted loss of $0.03 per share on sales of $1.5 billion. The company’s revenue was up 1.3% year over year. Meanwhile, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 12.5% year over year to $81.2 million.

Fiscal Q4 guidance was mixed, but there was a big bright spot

For its fiscal fourth quarter, Petco is guiding for sales of roughly $1.55 billion, while earnings per share are expected to come in between $0 and $0.02. For comparison, the analysts’ consensus prediction is for the business to post adjusted earnings per share of $0.04 on sales of $1.57 billion.

But while sales and earnings guidance for Q4 fell short of Wall Street’s targets, the company said that it expects adjusted EBITDA to come in between $90 million and $95 million after accounting for $10 million in third-party consulting fees stemming from the business’s transformation effort. To hit the middle of that range, it would have to grow adjusted EBITDA by roughly 14% on a sequential basis. In context, this suggests that the company is making progress, and that its bottom line could see corresponding improvements in the near future.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.