PetSmart Inc. (NASDAQ: PETM) has been all over the place, and it appears that the stock will remain all over the place going into earnings. Word has surfaced, what we would argue is “again” that word has surfaced, that the specialty retailer will explore a sale of the company. This has been speculated before on the heels of activist investor news.

Tuesday’s move follows reports from Reuters and Dow Jones that PetSmart would explore a sale, but this is also ahead of earnings due on Wednesday morning. This does two things for the earnings expectations. First, it almost certainly lowers the expectations of any good earnings report. Second, it convolutes how anyone would evaluate this company on a standalone basis.

Thomson Reuters has estimates of $0.94 in earnings per share (versus $0.89 a year ago) on only a 1.4% revenue gain to $1.73 billion. The problem with this scenario is that PetSmart lowered guidance in May, long before the snap-back recovery in July. The activist investing firm Jana Partners has taken aim at the company.

What is arguable is how much someone will pay to acquire the company. What is not arguable is how this stock become stuck like chuck starting in 2012, before nudging slightly higher in 2013. The only thing keeping the stock this high is the hope and prayer of a buyout. But along those lines, PetSmart is already valued at 17 times trailing earnings and is worth 15 times next year’s expected earnings.

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Will a private equity firm pay up for this? Maybe, but ultimately it has to get its money back for investors. Will Petco merge with it, or would it even be allowed by regulators? TPG Capital and Leonard Green & Partners already acquired Petco back in 2006. Would they want an even larger pet supplies store chain in a double-dip effort?

The stock started Tuesday relatively slow, staying just above the previous day’s close at $68.44, at least until about 3:15 p.m. Eastern Time. The price then moved higher after the reports surfaced and rose to above $71.00, closing up 1.8% at $69.70. The trading volume was more than 4.1 million shares, close to double the average daily volume.

The past 30 days have been tumultuous for PetSmart, having reached highs of above $70.00 in late July to the stock falling below $68.00. Over the past three months, PetSmart has made a spectacular fall and then an even better recovery on the reasons cited above.

Stay tuned. This is one of those stories that keeps changing. It is also a story that just refuses to die.

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