You should see plus signs that go off in different directions. Fly along and keep using the item in your hot bar, if the plus signs are still going off in a direction ahead of you, keep going and using the item that way. Once you get very close to the lost pet is when you will see the beam come down. Each set of plus signs that head off in different directions is where a pet is and of course it will point to a lot of them at your base once your out far enough. I always start at my base and just head out in one direction till I find the lost pet.