Chewy Captures Market Share in 2026: Set for Growth in Q2
Chewy's Growth: Chewy's stock is experiencing significant growth, driven by its digital-first model and strong performance in the pet care industry, with a reported $3.26 billion in net revenue for the quarter, marking an 8.1% increase on an adjusted basis.
Market Position: The company consistently outperforms its peers, benefiting from increased customer engagement and sales, particularly in autoship sales, which represent a critical revenue stream tied to food and health care products.
Earnings and Margins: Chewy reported a 72% increase in net income and a 30.4% rise in adjusted EBITDA, although adjusted earnings per share fell slightly short of expectations, indicating mixed results in margin performance.
Future Outlook: Analysts maintain a moderate buy rating on Chewy's stock, forecasting a potential rebound with a long-term EPS growth rate of 10-20%, despite concerns about current valuation and market resistance levels.
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- Optimistic Financial Outlook: Chewy's guidance for fiscal 2026 projects full-year revenue between $13.6 billion and $13.75 billion, reflecting an 8% to 9% growth rate, which demonstrates the company's confidence in future growth despite the overall low growth in the pet industry.
- Steady Customer Growth: The number of active customers increased by 4% year-over-year to 21.3 million, while net sales per active customer rose by 2.2% to $591, indicating ongoing improvements in customer retention and sales efficiency, thereby enhancing market competitiveness.
- Margin Expansion: The company expects adjusted EBITDA margins to range between 6.6% and 6.8%, about 100 basis points higher than fiscal 2025, primarily driven by increased private brand penetration and the ramp-up of its new fulfillment center, further solidifying Chewy's profitability.
- Attractive Stock Valuation: Despite Chewy's stock being down nearly 21% in 2026, its forward P/E ratio stands at just 17 times current-year estimates, indicating a relatively undervalued investment opportunity, with potential for market recognition of its future growth prospects.
- Emerging Employee Trend: As U.S. companies mandate a full return to office, pet care is increasingly recognized as a vital short-term support service, with approximately 59 million Americans providing family care in 2024, highlighting the strong demand for pet care.
- Significant Absenteeism Impact: A survey by Wagmo reveals that 75% of pet owners missed work due to pet care issues in the past year, with 26% missing six or more days, indicating a direct impact on employee productivity.
- Expanded Corporate Benefits: Wellthy introduced pet care into its back-up services in 2024, with around 50% of clients offering this benefit, showcasing innovation and adaptability in employee welfare aimed at enhancing satisfaction and retention rates.
- Context of Caregiving Crisis: While pet care may not be the most urgent need, Wellthy's service expansion aligns with the founder's personal caregiving experiences, aiming to alleviate financial and emotional stress for families, thereby improving overall workplace productivity.
- Earnings Highlights: Chewy reported a 0.5% year-over-year revenue growth in Q4, reaching $3.26 billion, which, while slightly below analyst expectations, reflects a stable customer base with active customers increasing by 4% to 21.3 million.
- Margin Expansion: The company's gross margin improved by 90 basis points to 29.4%, and adjusted EBITDA margins rose from 3.8% to 5%, leading to a 30.4% increase in adjusted EBITDA to $162.3 million, indicating enhanced operational efficiency.
- Future Guidance: Chewy anticipates full-year revenue between $13.6 billion and $13.75 billion, representing growth of 8% to 9%, with adjusted EBITDA projected between $900 million and over $930 million, reflecting a growth rate of 20% to 29%, showcasing confidence in future market conditions.
- Market Appeal: Despite a nearly 21% decline in stock price in 2026, Chewy's forward P/E ratio stands at just 17 times current-year estimates, indicating significant undervaluation for a high-growth company, suggesting substantial upside potential ahead.

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Report Overview: Recent reports from investment and research firms provide insights into analysts' perspectives on various companies.
Disclaimer: The views expressed in these reports do not reflect the opinions or recommendations of Barron’s.
Investment Services: Some report issuers may have existing or potential investment-banking relationships with the companies analyzed.
Purpose of Reports: The reports serve as a sampling of analyst thinking rather than definitive investment advice.
Chewy's Growth: Chewy's stock is experiencing significant growth, driven by its digital-first model and strong performance in the pet care industry, with a reported $3.26 billion in net revenue for the quarter, marking an 8.1% increase on an adjusted basis.
Market Position: The company consistently outperforms its peers, benefiting from increased customer engagement and sales, particularly in autoship sales, which represent a critical revenue stream tied to food and health care products.
Earnings and Margins: Chewy reported a 72% increase in net income and a 30.4% rise in adjusted EBITDA, although adjusted earnings per share fell slightly short of expectations, indicating mixed results in margin performance.
Future Outlook: Analysts maintain a moderate buy rating on Chewy's stock, forecasting a potential rebound with a long-term EPS growth rate of 10-20%, despite concerns about current valuation and market resistance levels.









