Roaring Kitty Stock Chewy Set to Join S&P MidCap 400 Index, Will Replace Stericycle
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Nov 04 2024
0mins
Should l Buy CHWY?
Source: Benzinga
Chewy Inc Stock Update: Chewy's stock gained momentum after being announced as a replacement for Stericycle in the S&P MidCap 400, with Goldman Sachs identifying it among 20 stocks that could benefit from a short squeeze if earnings exceed expectations.
Financial Performance: Chewy reported second-quarter sales of $2.86 billion, slightly above consensus estimates, and forecasts third-quarter sales between $2.84 billion and $2.86 billion, reflecting a year-to-date stock increase of over 21%.
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Analyst Views on CHWY
Wall Street analysts forecast CHWY stock price to rise
20 Analyst Rating
17 Buy
3 Hold
0 Sell
Strong Buy
Current: 23.590
Low
42.00
Averages
47.06
High
52.00
Current: 23.590
Low
42.00
Averages
47.06
High
52.00
About CHWY
Chewy, Inc. is an e-commerce business geared toward pet products and services. The Company’s products consist of pet food and treats, pet supplies and pet medications, other pet-health products, and pet services. It serves its customers through its retail websites, and its mobile applications and focuses on delivering customer service, competitive prices, convenience, including Chewy’s Autoship subscription program, and a range of pet food, treats and supplies, and pet healthcare products and services. It partners with approximately 3,200 of the brands in the pet industry, and it creates and offers its own private brands. It owns a number of trademark registrations and applications in the United States and in foreign jurisdictions. These trademarks include American Journey, Blue Box Event, Careplus, Chewy, Chewy.com, Chewy Vet Care, Dr. Lyon’s, Frisco, Goody Box, Onguard, PetMD, PracticeHub, Tiny Tiger, True Acre Farms, Tylee’s, Vibeful, and The Zoo.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Chewy Reports Earnings Growth and Customer Loyalty Expansion
- Customer Loyalty Highlighted: Over 80% of Chewy's sales come from recurring customers, indicating the success of its Autoship service, which significantly enhances visibility on future sales and boosts investor confidence in long-term growth.
- Revenue Diversification Strategy: By expanding into veterinary clinics in the U.S., Chewy not only diversifies its revenue streams but also attracts new customers who have yet to try its e-commerce platform, further driving overall business growth.
- Profitability Milestone Achieved: Chewy has reached profitability in recent years, and despite its stock price dropping nearly 30% this year, the company's consistent revenue growth and successful market expansion lay a solid foundation for potential stock price recovery, demonstrating its long-term investment value.
- Attractive Valuation for Investors: Chewy's stock is currently trading at 15 times forward earnings estimates, a significant drop from over 30 times a year ago, making this reasonable valuation potentially a once-in-a-lifetime buying opportunity, especially given the company's strong fundamentals.
See More
Chewy's Stock Down 30% Yet Outlook Remains Positive
- Profitability Milestone: Chewy has achieved profitability despite a nearly 30% drop in stock price this year, indicating sustained growth in its e-commerce business in both the U.S. and Canada, showcasing its market expansion potential and profitability.
- Revenue Diversification: By adding veterinary clinics in the U.S., Chewy not only diversifies its revenue streams but also attracts new customers who have yet to try its e-commerce platform, thereby enhancing its competitive edge in the market.
- Customer Loyalty: With over 80% of sales coming from recurring customers, Chewy's Autoship service effectively boosts customer retention, ensuring visibility and stability in sales for the upcoming quarters.
- Reasonable Valuation: Although Chewy's stock performance has not reflected its fundamentals, the current 15x forward earnings ratio is reasonable compared to over 30x a year ago, suggesting that this may be an excellent buying opportunity.
See More
Meta Ordered to Pay $375 Million for Child Exploitation Violations
- Legal Judgment Impact: A New Mexico jury ruled that Meta violated child protection laws, ordering the company to pay $375 million, which represents approximately 0.625% of its nearly $60 billion revenue in Q4, potentially negatively impacting its financials.
- Appeal Plans: A Meta spokesperson stated that the company intends to appeal the verdict, indicating dissatisfaction with the legal outcome, which may lead to increased future legal costs and affect the company's reputation.
- Market Reaction Muted: Despite facing significant legal challenges, Meta's stock price showed little movement in after-hours trading, reflecting a relatively subdued market reaction that may indicate investor confidence in the company's long-term profitability.
- Additional Legal Suits: Meta is also facing another lawsuit in Los Angeles, accusing it and YouTube of misleading users about app safety, which could further increase the company's legal and compliance pressures.
See More
Analysis and Outlook: Shaken Confidence
- Market Volatility: Stocks fluctuated throughout the day, alternating between gains and losses.
- Diplomatic Uncertainty: Investors were reacting to conflicting statements from the Trump administration and Iranian officials regarding potential back-channel diplomacy aimed at resolving the ongoing conflict.
See More
Key Earnings Reports and Developments for Investors to Watch
- Earnings Reports Ahead: On Wednesday, Chewy, Paychex, PDD Holdings, and Beyond are set to release quarterly earnings, with the market generally expecting Chewy's sales to remain flat, which could impact investor sentiment.
- Chewy's Growth Outlook: Chewy anticipates a growth rate of 7% to 8% in 2026, driven by steady customer growth and increased spending per user on its auto-ship subscription service, which constitutes a significant portion of its revenue.
- Margin Improvement: Analysts indicate that Chewy is leaning into higher-margin areas such as advertising and services, which is expected to further enhance the company's overall profitability and strengthen its competitive position in the market.
- Fed Commentary Watch: Federal Reserve Governor Stephen Myron will deliver remarks on Wednesday, and investors will closely monitor any signals regarding the Fed's rate path, particularly given the volatility in energy prices and geopolitical tensions that could influence the economic outlook going forward.
See More
Markets Decline Amid Uncertainty Over Iran Conflict
- Troop Deployment News: The Pentagon's plan to send 3,000 soldiers to the Middle East caused markets to decline after an earlier rally, reflecting ongoing uncertainty over the Iran conflict, which may dampen investor confidence.
- Oil Price Surge: West Texas Intermediate crude rose about 5% to $92 per barrel, indicating market sensitivity to geopolitical risks that could lead to volatility in energy stocks.
- Optical Market Activity: Applied Optoelectronics announced a new order worth over $53 million for 800G data center transceivers, driving its stock up nearly 20% and boosting shares of Corning and other optical companies, signaling strong demand in the sector.
- Home Depot Acquisition: Home Depot's SRS Distribution subsidiary is acquiring HVAC distributor Mingledorff's, expanding its total addressable market to $1.2 trillion, aligning with its strategy to enhance offerings for professional customers, which is expected to drive future revenue growth.
See More
Chewy Reports Earnings Growth and Customer Loyalty Expansion
- Customer Loyalty Highlighted: Over 80% of Chewy's sales come from recurring customers, indicating the success of its Autoship service, which significantly enhances visibility on future sales and boosts investor confidence in long-term growth.
- Revenue Diversification Strategy: By expanding into veterinary clinics in the U.S., Chewy not only diversifies its revenue streams but also attracts new customers who have yet to try its e-commerce platform, further driving overall business growth.
- Profitability Milestone Achieved: Chewy has reached profitability in recent years, and despite its stock price dropping nearly 30% this year, the company's consistent revenue growth and successful market expansion lay a solid foundation for potential stock price recovery, demonstrating its long-term investment value.
- Attractive Valuation for Investors: Chewy's stock is currently trading at 15 times forward earnings estimates, a significant drop from over 30 times a year ago, making this reasonable valuation potentially a once-in-a-lifetime buying opportunity, especially given the company's strong fundamentals.
See More
Chewy's Stock Down 30% Yet Outlook Remains Positive
- Profitability Milestone: Chewy has achieved profitability despite a nearly 30% drop in stock price this year, indicating sustained growth in its e-commerce business in both the U.S. and Canada, showcasing its market expansion potential and profitability.
- Revenue Diversification: By adding veterinary clinics in the U.S., Chewy not only diversifies its revenue streams but also attracts new customers who have yet to try its e-commerce platform, thereby enhancing its competitive edge in the market.
- Customer Loyalty: With over 80% of sales coming from recurring customers, Chewy's Autoship service effectively boosts customer retention, ensuring visibility and stability in sales for the upcoming quarters.
- Reasonable Valuation: Although Chewy's stock performance has not reflected its fundamentals, the current 15x forward earnings ratio is reasonable compared to over 30x a year ago, suggesting that this may be an excellent buying opportunity.
See More
Meta Ordered to Pay $375 Million for Child Exploitation Violations
- Legal Judgment Impact: A New Mexico jury ruled that Meta violated child protection laws, ordering the company to pay $375 million, which represents approximately 0.625% of its nearly $60 billion revenue in Q4, potentially negatively impacting its financials.
- Appeal Plans: A Meta spokesperson stated that the company intends to appeal the verdict, indicating dissatisfaction with the legal outcome, which may lead to increased future legal costs and affect the company's reputation.
- Market Reaction Muted: Despite facing significant legal challenges, Meta's stock price showed little movement in after-hours trading, reflecting a relatively subdued market reaction that may indicate investor confidence in the company's long-term profitability.
- Additional Legal Suits: Meta is also facing another lawsuit in Los Angeles, accusing it and YouTube of misleading users about app safety, which could further increase the company's legal and compliance pressures.
See More
Analysis and Outlook: Shaken Confidence
- Market Volatility: Stocks fluctuated throughout the day, alternating between gains and losses.
- Diplomatic Uncertainty: Investors were reacting to conflicting statements from the Trump administration and Iranian officials regarding potential back-channel diplomacy aimed at resolving the ongoing conflict.
See More
Key Earnings Reports and Developments for Investors to Watch
- Earnings Reports Ahead: On Wednesday, Chewy, Paychex, PDD Holdings, and Beyond are set to release quarterly earnings, with the market generally expecting Chewy's sales to remain flat, which could impact investor sentiment.
- Chewy's Growth Outlook: Chewy anticipates a growth rate of 7% to 8% in 2026, driven by steady customer growth and increased spending per user on its auto-ship subscription service, which constitutes a significant portion of its revenue.
- Margin Improvement: Analysts indicate that Chewy is leaning into higher-margin areas such as advertising and services, which is expected to further enhance the company's overall profitability and strengthen its competitive position in the market.
- Fed Commentary Watch: Federal Reserve Governor Stephen Myron will deliver remarks on Wednesday, and investors will closely monitor any signals regarding the Fed's rate path, particularly given the volatility in energy prices and geopolitical tensions that could influence the economic outlook going forward.
See More
Markets Decline Amid Uncertainty Over Iran Conflict
- Troop Deployment News: The Pentagon's plan to send 3,000 soldiers to the Middle East caused markets to decline after an earlier rally, reflecting ongoing uncertainty over the Iran conflict, which may dampen investor confidence.
- Oil Price Surge: West Texas Intermediate crude rose about 5% to $92 per barrel, indicating market sensitivity to geopolitical risks that could lead to volatility in energy stocks.
- Optical Market Activity: Applied Optoelectronics announced a new order worth over $53 million for 800G data center transceivers, driving its stock up nearly 20% and boosting shares of Corning and other optical companies, signaling strong demand in the sector.
- Home Depot Acquisition: Home Depot's SRS Distribution subsidiary is acquiring HVAC distributor Mingledorff's, expanding its total addressable market to $1.2 trillion, aligning with its strategy to enhance offerings for professional customers, which is expected to drive future revenue growth.
See More
