Category: CHWY

CHWY – Chewy (CHWY) Outpaces Stock Market Gains: What You Should Know

In the latest trading session, Chewy (CHWY Free Report) closed at $84.67, marking a +1.77% move from the previous day. The stock outpaced the S&P 500’s daily gain of 0.2%.

Prior to today’s trading, shares of the online pet store had gained 5.52% over the past month. This has outpaced the Consumer Staples sector’s loss of 1% and the S&P 500’s gain of 3.28% in that time.

CHWY will be looking to display strength as it nears its next earnings release. In that report, analysts expect CHWY to post earnings of -$0.01 per share. This would mark year-over-year growth of 87.5%. Our most recent consensus estimate is calling for quarterly revenue of $2.17 billion, up 27.36% from the year-ago period.

CHWY’s full-year Zacks Consensus Estimates are calling for earnings of $0.12 per share and revenue of $8.99 billion. These results would represent year-over-year changes of +33.33% and +25.76%, respectively.

It is also important to note the recent changes to analyst estimates for CHWY. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 14.63% higher. CHWY currently has a Zacks Rank of #1 (Strong Buy).

In terms of valuation, CHWY is currently trading at a Forward P/E ratio of 708.09. This represents a premium compared to its industry’s average Forward P/E of 17.05.

It is also worth noting that CHWY currently has a PEG ratio of 35.4. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. The Consumer Products – Staples industry currently had an average PEG ratio of 2.5 as of yesterday’s close.

The Consumer Products – Staples industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 75, which puts it in the top 30% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

CHWY – Chewy (CHWY) Stock Moves -0.66%: What You Should Know

Chewy (CHWY Free Report) closed at $76.98 in the latest trading session, marking a -0.66% move from the prior day. This change was narrower than the S&P 500’s 0.75% loss on the day.

Prior to today’s trading, shares of the online pet store had lost 0.23% over the past month. This has was narrower than the Consumer Staples sector’s loss of 2.22% and lagged the S&P 500’s gain of 2.74% in that time.

CHWY will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of -$0.02, up 75% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $2.17 billion, up 27.48% from the year-ago period.

CHWY’s full-year Zacks Consensus Estimates are calling for earnings of $0.10 per share and revenue of $9 billion. These results would represent year-over-year changes of +11.11% and +25.91%, respectively.

Investors should also note any recent changes to analyst estimates for CHWY. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company’s business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. CHWY is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, CHWY is currently trading at a Forward P/E ratio of 756. Its industry sports an average Forward P/E of 16.99, so we one might conclude that CHWY is trading at a premium comparatively.

Also, we should mention that CHWY has a PEG ratio of 37.8. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company’s expected earnings growth rate into account. CHWY’s industry had an average PEG ratio of 2.48 as of yesterday’s close.

The Consumer Products – Staples industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 119, which puts it in the top 47% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

CHWY – Pandemic Pet Adoptions Add To Chewy's Tailwinds, But Is Sustainability In Store?

The pet industry has been on a tear for the past two years, and it does not seem like it is going to abate anytime soon. Pandemic homebodies hit animal shelters even as they were undertaking stealth home improvement projects, keeping both categories firmly in the black.

Millennials that are delaying having children are adopting four-footed friends and treating them like children. Meanwhile empty nesting baby boomers are seeking out breeders for surrogate tail-bearing grandchildren and spoiling them accordingly. Full confession, our home applies.

According to the American Pet Products Association, in 2020 sales for pet products exceeded $100 billion ($103.6 billion) for the first time in history. Further they predict that number to increase approximately 6 percent in 2021, double the historical increase of 3 percent.

Choosing Chewy

In a recent CNBC interview on Mad Money, Chewy’s CEO, Sumit Singh reported that there is no appreciable uptick in pets being returned to shelters, post pandemic, which is another positive indicator. Additionally, the pet products provider last month launched a pet adoption service, working with 6,000 shelters, throughout the country.

Privately held PetSmart acquired Chewy back in 2017 for about $3 billion, and split them off in a June 2019 IPO. The $22 per share offering price yielded a $9 billion valuation. The past week’s $75 to $77 per-share price range put the companies market cap over $32 billion. According to a Statistica April 2021 release, based on annual revenue, PetSmart now commands 25.1 percent of the pet product market and Petco has 15.6 percent.

Meanwhile, in the fast-growing e-commerce pet product market, Amazon

AMZN
leads with 59 percent, followed by Chewy at 41 percent and Walmart

WMT
at 33 percent. PetSmart and Petco are in fourth and fifth place, respectively.

DTC High-Flyers

Chewy is certainly among the high-flying direct-to-consumer brands whose business continues to grow at a staggering rate. However, from inception through their 2019 IPO, and until the third quarter of 2020, they had never been profitable. The banner year of 2020 saw the company’s customer base rise by 32 percent, to 19.8 million customers, with an 8.7 percent net increase in spending by active customers. Chewy’s 2021 first quarter was also quite positive, with $2.14 billion in net sales yielded a modest net income of $38.7 million. Their gross margin of 27.6 percent improved 4.2 percent years-over-year over 2020’s 23.4 percent.

But, perhaps the most impressive was fact that their subscription “Autoship” customers rose 34.4 percent to $1.48 billion and accounted for 69.3 percent of top line sales. This demonstrates the degree to which Chewy’s customers (our household included) have become dependent upon the monthly box (or boxes) arriving at their doorsteps, more on that in a bit.

Profits Anyone?

As has been the case with most every major direct-to-consumer retailer, that is an e-commerce pure play, growth, scale, and volume do not readily equate to profit; Casper, ThredUp and The RealReal

REAL
being prime examples. “Wall Street has a tendency to look at anything that’s in e-commerce, jump up and down, get terribly excited about it and say, ‘Oh, isn’t it wonderful?” said Neil Saunders in a recent interview.

Admittedly venture capital and the markets have had an appetite for building these mega direct-to-consumer companies and have taken a ‘long view’ on profitability, but certain market realities are starting to sink in.

As outwardly efficient as DTC selling appears, with its low threshold to entry and its lack of retail infrastructure, the nosebleed costs of customer acquisition, warehousing, distribution, and last mile delivery and return costs will continue to plague their pursuit of profitability. Even with Chewy’s reported gross profit increase to 27.6 percent, it pales in comparison to omnichannel competitor Petco, who reported a gross profit margin of 42.8 percent in their fiscal year ending April 30, 2021.

The Dye Has Been Cast

Clearly, industry leaders such as Target

TGT
, Walmart, and Best Buy

BBY
have demonstrated over the last half dozen years that survival and profitability in this era of unified commerce depends on a hub-and-spoke model, with the store being the hub. These retailers have demonstrated that the store has an active role to play in e-commerce distribution, micro-fulfillment, and the customer’s path-to-purchase. Target executives have gone on record saying shipping from stores saves them 40 percent on online fulfillment costs over shipping from distribution centers.

Petco’s 1,450+ store base provides them with the advantage of faster and lower cost delivery. And while we have become conditioned to quick turnaround, there are several other factors that are quickly becoming top-of-mind for more consumers.

Be Sustainable or Be Stained  

With the predictability of Chewy’s near 70 percent Autoship prescription penetration, distribution of those products takes on an entirely different complexion. Ironically, PetSmart, Chewy’s biological parent, along with their 1500 stores suddenly looks real appealing as a lifeline and means of solving the increasingly expensive “last mile” fulfillment solution. Oh, and then there is the nasty cardboard problem that will increasingly be perceived as anathema to great brand value.   

Sustainability, and carbon neutrality have become hot button issues for consumers of nearly every demographic, but particularly Millennials and Generation Z’s. Not to put too fine a point on the matter, I was rather astounded with our most recent Chewy delivery. The order included a bag of dog food, and a tiny package of probiotics. They were scheduled for the same day delivery and arrived together, but in two separate boxes on the same truck. The order could have readily been put into one box, and this was not the first time “their dog bit the environment.”

CHWY – Time to Treat Yourself to Chewy Stock After Upgraded 2021 Guidance

Pet e-commerce company Chewy (NYSE:CHWY) has now put up back-to-back solid earnings reports since the high-growth tech stock sell-off started this past March. Shares are down 18% so far this year as a result, including down 36% from all-time highs as of this writing.

This four-legged friend tech innovator is doing just fine, though. In fact, shares look like a downright good deal right now. If you haven’t done so already, now looks like the time to adopt this pet care leader into your portfolio.

Pets love e-commerce, too

Chewy said it ended its first quarter of 2021 (the three months ended May 2, 2021) with 19.8 million customers, a 32% increase year over year. These pet parent households spent on average $388, an almost 9% increase. Over 69% of them use Chewy’s popular autoship option, in which food and other supplies are automatically delivered on a recurring basis — creating a highly predictable stream of revenue for Chewy.  

Someone sitting on a floor working on a home improvement project with a dog sitting next to them.

Image source: Getty Images.

As a result, the pet e-comm leader said total sales and adjusted EBITDA were a respective $2.14 billion and $77.4 million in Q1. Sales represented a 32% increase, and adjusted EBITDA during the same period a year ago was only $3.44 million. Clearly Chewy is in the early stages of reaching a profitable scale as it adds new pet-owning families to the fold.  

The solid quarterly report prompted a full-year 2021 upgrade. Management now says revenue will be $8.9 billion to $9.0 billion (25% to 26% growth, about $100 million more than the previous outlook). Adjusted EBITDA margin should be between 2% and 2.4% — which works out to an adjusted EBITDA range of $178 million to $216 million.  

Not bad considering Chewy is still spending heavily to promote expansion. Profit margin also factors for supply chain constraints, out-of-stock issues, and other general cost increases related to the reopening of the economy this year. 

Tech for the whole pack

Chewy has experienced rapid growth the last two years, and effects from the pandemic made its e-commerce platform and set-it-and-forget-it autoship feature that much more sticky. Specifically, 8.4 million households have been added since 2019. Management explained this means the weighted average tenure of pet owners and their pet partners using its site is less than two years. Average annual spend for these newer customers is less than $400, but long-term Chewy fans spend much more. Average household spending is at $700 for those dogs and cats that have been Chewy patrons for five years.  

Put another way, Chewy isn’t just growing by adding new pet shoppers. Existing households alone represent a big growth opportunity in the years ahead, which will equate to greater business efficiency and higher profitability. The tech outfit is building on this potential. It recently launched a foray into fresh food, offering products from fellow pet upstart Freshpet (NASDAQ:FRPT) as well as Chewy’s own brand Tylee’s. 

Pet care services are also making headway. Chewy Health launched a telehealth line “Connect with a Vet” last quarter, and virtual vet professionals are now available seven days a week, 365 days a year. Paired with its pharmacy business (which now includes over 7,000 vets and clinics that use Chewy to automate prescriptions for four-legged friends), this e-commerce site has turned into a real tech powerhouse for all members of the pack.

To top it off, Chewy is still solely based here in the U.S. and hasn’t even started entering markets outside of the states yet. On the Q1 conference call, CEO Sumit Singh said that’s still a “one to five year plan.” Clearly, Chewy is taking a disciplined approach to any international expansion that might be coming down the road, but it will have a well-trained template for success here in the U.S. if and when it does.

As of this writing, Chewy trades for about 3.5 times expected full-year 2021 sales. Profitability is still minimal and doesn’t offer anything meaningful in the way of valuing the business at this juncture, but the company is obviously quickly reaching a profitable scale with lots more potential via new product launches and pet care. Given the company’s alpha dog status in pet e-commerce and its enduring growth story, this stock looks like a long-term value.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

CHWY – More Room For Growth in Chewy's Stock?

Chewy stock (NYSE: CHWY), an online retailer of pet products in the U.S, experienced almost a 6% gain over the last week (five trading days) to levels of around $79 currently. But will the company’s stock see higher levels over the coming weeks, or is a decline in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price, returns for CHWY stock average around 4.5% in the next one-month (twenty-one trading days) period after experiencing a 5.6% rise in a week. But how would these numbers change if you are interested in holding CHWY stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Chewy stock chances of a rise after a fall or rise. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF CHWY stock moved by -5% over five trading days, THEN over the next twenty-one trading days, CHWY stock moves an average of 8.8%, which implies an excess return of 7.6% compared to the S&P500.

More importantly, there is a 73% probability of a positive return over the next twenty-one trading days and a 69% probability of a positive excess return after a -5% change over five trading days.

Some Fun Scenarios, FAQs & Making Sense of Chewy Stock Movements:

Question 1: Is the average return for Chewy stock higher after a drop?

Answer: Consider two situations,

Case 1: Chewy stock drops by -5% or more in a week

Case 2: Chewy stock rises by 5% or more in a week

Is the average return for Chewy stock higher over the subsequent month after Case 1 or Case 2?

CHWY stock fares better after Case 1, with an average return of 8.9% over the next month (twenty-one trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 5.0% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next twenty-one trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Chewy stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold Chewy stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For CHWY stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for Chewy after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although CHWY stock appears to be an exception to this general observation.

CHWY returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for CHWY stock by changing the inputs in the charts above.

E-commerce is eating into retail sales, but this might be an investment opportunity. See our theme on E-commerce Stocks for a diverse list of companies that stand to benefit from the big shift.

See all Trefis Featured Analyses and Download Trefis Data here

CHWY – Chewy Earnings Beat Expectations, Retailer Says More Growth Ahead

Online pet retailer Chewy is a big dog now, but the company continues to grow like a young pup.

Chewy released first-quarter earnings that beat expectations, posting net sales of $2.14 billion – up 32% year over year. Net income was $38.7 million and adjusted earnings were $77.4 million.

It added 600,000 active customers during the quarter, compared to the fourth quarter total, bringing the number of active customers to 19.2 million.

Wall Street has been worrying of late that the momentum Chewy gained during the pandemic will stall once vaccinated consumers return to stores, and offices, and begin spending less time at home with their pets.

Chewy has been something of a Wall Street pet since its June 14, 2019 IPO, but concerns about its post-pandemic prospects have had an impact recently. The stock closed at $79.35 before the after-market earnings release, up more than 250% over its $22 IPO price, but down about 35% from its 52-week high of $120 on February 16 of this year.

The stock dipped slightly after the earnings release, down about 1% for most of the four hours following the release.

Chewy, however, makes a convincing case that the customers it added during the pandemic will stay loyal, and that those customers’ biggest spending years are still ahead of them.

“Our average active customer is still squarely on the left side of their lifetime spending curve with us,” said Chewy CEO Sumit Singh.

Chewy customers, he said, historically spend over $400 in their second year of buying from Chewy, approximately $700 in their fifth year, and $900 in their ninth year.

The influx of an additional 8.4 million active customers over the past two years means that the average tenure of a Chewy customer is just under two years.

“We believe that we still have significant share of wallet gain left to realize from a substantial component of our customer base,” he said.

Average spend per active customer continued to increase during the quarter, rising 8.7% to reach $388.

Average spend by new customers rose 13% during the first quarter.

Chewy also is trying to create more pet parents with one of its newest initiatives, a partnership with animal rescue organizations that post links to dogs and cats available for adoption.

A report this week by Cardify.ai, a consumer data analytics firm that collects anonymized credit and debit card data, found that Chewy is stealing market share from older competitors Petco and PetSmart, and growing average basket size more rapidly that those predominantly brick-and-mortar rivals.

While all three brands gained revenue during the pandemic and into 2021, “Chewy’s revenue growth has significantly outpaced both Petco and PetSmart,” Cardify.ai said.

Chewy’s average basket size (or total purchase per visit to the site) jumped from $55 to $65 between 2019 and 2021, while Petco and PetSmart both hovered around $35 to $40 during that period.

Chewy grew its market share from 33.5% in the first quarter of 2019 to 42.4% in the first quarter of this year, according to Cardify.ai. Chewy’s gains appear to come mostly at the expense of PetSmart, the report said, with that retailer seeing its market share drop to 33%, down from 41.4%, during the same period.

Derrick Fung, CEO of Cardify.ai, attributes the more robust spending by Chewy customers to the online retailers’ customer service, which is frequently praised in Cardify.ai surveys.

Chewy’s biggest challenge is awareness, Fung said, Cardify.ai surveys found that pet owners who don’t shop at Chewy “haven’t used it because they haven’t heard of it,” or haven’t yet had a chance to try it. The ones who do tend to stick with it, and Fung expects that to continue after the pandemic ends.

“There’s been a lot of chatter around when things open up, is e-commerce going to fall off, are we going to go back to our old ways,” Fung said. “The data says no. It shows convenience is still very important and once you try it I don’t think you’ll want to go back to the store again.”

The earnings report comes almost two years after Chewy’s IPO debut on June 14, 2019.

Before the after-market earnings release, Chewy’s stock closed at $xx.xx Thursday, down x% from its 52.week high of $120 on February 16.

CHWY – Chewy CEO says dog, cat adoption rates have remained high as the economy reopens

In this article

As homebound Americans waited out the coronavirus pandemic last year, people increasingly turned to animal shelters and adopted dogs and cats as lockdown companions.

Though lockdowns have eased and the country has reopened, adoption rates have largely kept shape, according to Sumit Singh, CEO of Chewy.

“Overall adoptions, we believe, [are] up still year over year by double-digit percentages both across dog and cat,” he told CNBC’s Jim Cramer Thursday.

Additionally, it does not look like pets are being returned to shelters in elevated numbers, said Singh, who appeared for an interview on “Mad Money.” Chewy, a $33 billion online pet food and supply store, last month launched a pet adoption service and is currently working with 6,000 shelters, he noted.

“The pets coming back into the shelters actually matches the rate that we were seeing in 2019, which actually would say that, when you balance out new adoptions and pets coming back, there’s still a whole lot more pets getting adopted right now, which is great for the industry.”

While Singh did not cite any statistics, online searches for pets remain elevated and the pet owner market has expanded greatly, based on research from Piper Sandler. The firm reports that searches for terms like “petfinder” and “puppies for sale” are up on a two-year basis, though it began tapering in April.

The pet products industry made $103.6 billion in sales in 2020, according to the American Pet Products Association. It’s the first time annual sales crossed the $100 billion mark, the trade group announced in March. The association projects that number to grow nearly 6% in 2021, which would exceed the historical average of about 3%.

After the close Thursday, Chewy reported results from its fiscal first quarter that ended May 2. The company’s revenues grew 31.7% to $2.14 billion from $1.62 billion a year ago. Results topped Wall Street’s estimates on the top and bottom lines.

Shares rose 2% during Thursday’s session to close at $79.35. The stock was down more than 1% in after-hour trading.

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