Chewy's Stock Underperformance Amidst Modest Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy CHWY?
Source: NASDAQ.COM
- Stock Underperformance: Chewy's stock has dropped approximately 23% this year, significantly underperforming the S&P 500 by about 22 percentage points, indicating investor concerns regarding its future growth prospects.
- Modest Revenue Growth: Although Chewy's revenue reached $10.1 billion in fiscal 2022, up from $4.8 billion in 2019, the growth rate has slowed to 8.3% as life returns to normal post-pandemic, raising questions about the sustainability of this growth.
- Increased Customer Engagement: As of Q3 fiscal 2025, Chewy's active customer base grew by 4.9% year-over-year to 21.2 million, with sales per active customer also rising to $595, demonstrating some success in customer retention and acquisition efforts.
- Valuation Risks: With a price-to-earnings ratio of 52, down from 68 at the end of 2025 but still significantly above the S&P 500's 29, the market reflects high growth expectations for Chewy, suggesting that failure to meet these expectations could lead to further stock price declines.
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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: 25.120
Low
42.00
Averages
47.06
High
52.00
Current: 25.120
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.
Small Investors' Opportunity to Double Returns
- Chewy's Market Performance: Despite Chewy's stock plummeting nearly 80% from pandemic highs, its sales continue to grow, with revenue expected to increase by 6% in fiscal 2025 and 8% in the following year, indicating a positive impact from new business lines.
- Innovation with Chewy Plus: The introduction of Chewy Plus, offering free shipping and 5% rewards, aims to enhance customer loyalty and drive sales growth, similar to Amazon Prime's model.
- Target's Transformation Plans: New CEO Michael Fiddelke has announced a $5 billion investment in store remodeling and technology upgrades, with a projected sales increase of about 2% for fiscal 2026, signaling hope for recovery.
- Target's Dividend Advantage: Despite challenges, Target maintains a 54-year streak of dividend increases, with an annual dividend of $4.56 per share yielding 3.9%, significantly higher than the S&P 500 average of 1.2%, providing investors with stable returns.
See More
Market Outlook for Chewy and Target
- Chewy Sales Growth: Despite a shift back to in-store shopping post-pandemic, Chewy continues to see sales growth, with a forecasted revenue increase of 6% for fiscal 2025 and 8% for fiscal 2026, indicating a positive impact from new business lines.
- Target Transformation Plan: The new CEO has announced a $5 billion investment in store remodeling and technology upgrades, with an expected sales increase of about 2% for fiscal 2026, signaling a potential turnaround after years of declining performance.
- Stock Price Attractiveness: Chewy's current P/E ratio stands at 52, which is high compared to the S&P 500's 29, but its forward P/E of 16, combined with consistent revenue growth, makes the stock more appealing to investors.
- Target's Stable Dividends: Target has raised its dividend for 54 consecutive years, currently offering $4.56 per share annually, resulting in a yield of 3.9%, significantly higher than the S&P 500's 1.2%, providing investors with a reliable return.
See More
Chewy's 23% Stock Price Decline Analysis
- Revenue Growth: Chewy's revenue surged from $4.8 billion in fiscal 2019 to $10.1 billion in fiscal 2022, showcasing significant growth driven by increased pet product demand during the pandemic, although this momentum has slowed as life normalizes.
- Active Customer Growth: As of Q3 fiscal 2025, Chewy's active customer count rose by 4.9% year-over-year to 21.2 million, with sales per active customer also increasing to $595, indicating effective strategies in customer retention and sales growth.
- Delivery Service Revenue: Revenue from Chewy's delivery service grew by 13.6% to $2.6 billion, demonstrating success in maintaining customer loyalty and providing a stable revenue stream, despite an overall revenue growth rate of 8.3%.
- Valuation Analysis: Despite the stock price drop, Chewy's P/E ratio remains at 52, significantly higher than the S&P 500's 29, reflecting high market expectations for future growth, prompting investors to carefully assess the investment opportunity.
See More
Chewy's Stock Underperformance Amidst Modest Growth
- Stock Underperformance: Chewy's stock has dropped approximately 23% this year, significantly underperforming the S&P 500 by about 22 percentage points, indicating investor concerns regarding its future growth prospects.
- Modest Revenue Growth: Although Chewy's revenue reached $10.1 billion in fiscal 2022, up from $4.8 billion in 2019, the growth rate has slowed to 8.3% as life returns to normal post-pandemic, raising questions about the sustainability of this growth.
- Increased Customer Engagement: As of Q3 fiscal 2025, Chewy's active customer base grew by 4.9% year-over-year to 21.2 million, with sales per active customer also rising to $595, demonstrating some success in customer retention and acquisition efforts.
- Valuation Risks: With a price-to-earnings ratio of 52, down from 68 at the end of 2025 but still significantly above the S&P 500's 29, the market reflects high growth expectations for Chewy, suggesting that failure to meet these expectations could lead to further stock price declines.
See More
Chewy Stock Pullback May Present Buying Opportunity
- Strong Sales Growth: Chewy has achieved over 8% revenue growth each quarter in the past fiscal year, with an 8.3% increase in the last quarter, demonstrating robust performance in the pet food and essentials market, particularly with a 16% year-over-year spending increase from autoship customers.
- Attractive Valuation: Despite deriving 84% of its sales from autoship customers and primarily selling necessities, Chewy's forward P/E ratio stands at just 16.5 times, significantly lower than peers like Walmart and Costco, indicating that its stock is appealing in the current market.
- Margin Improvement: By introducing a paid membership program and expanding private label offerings, Chewy increased its gross margin by 50 basis points to 29.8% in Q3, while its EBITDA margin expanded by 100 basis points to 5.8%, reflecting the company's efforts to enhance operational efficiency.
- Sustained Growth Potential: Although user growth shows signs of maturation, Chewy is still on track to achieve its 10% EBITDA margin goal, and with its stable revenue model and attractive valuation, it presents significant investment value in the market.
See More
Chewy Stock Analysis: Attractive Growth Opportunity
- Strong Sales Growth: Chewy has achieved over 8% revenue growth each quarter in the past year, with an 8.3% increase in the last quarter, indicating robust demand in the pet food and essentials market, particularly with a 16% rise in spending from autoship customers.
- Attractive Valuation: With a forward P/E ratio of just 16.5, significantly lower than peers like Walmart and Costco, Chewy's valuation presents a compelling buying opportunity for investors looking for defensive retail stocks.
- Margin Improvement: By introducing a paid membership program and expanding private label offerings, Chewy has increased its gross margin by 50 basis points to 29.8% in Q3, while its EBITDA margin rose by 100 basis points to 5.8%, reflecting the company's focus on operational efficiency.
- Expanding Customer Base: Chewy's active customer base continues to grow, with average annual spending nearing $600, and despite signs of maturing user growth, overall sales remain strong, positioning the company to achieve its 10% EBITDA margin goal in the coming years.
See More
Small Investors' Opportunity to Double Returns
- Chewy's Market Performance: Despite Chewy's stock plummeting nearly 80% from pandemic highs, its sales continue to grow, with revenue expected to increase by 6% in fiscal 2025 and 8% in the following year, indicating a positive impact from new business lines.
- Innovation with Chewy Plus: The introduction of Chewy Plus, offering free shipping and 5% rewards, aims to enhance customer loyalty and drive sales growth, similar to Amazon Prime's model.
- Target's Transformation Plans: New CEO Michael Fiddelke has announced a $5 billion investment in store remodeling and technology upgrades, with a projected sales increase of about 2% for fiscal 2026, signaling hope for recovery.
- Target's Dividend Advantage: Despite challenges, Target maintains a 54-year streak of dividend increases, with an annual dividend of $4.56 per share yielding 3.9%, significantly higher than the S&P 500 average of 1.2%, providing investors with stable returns.
See More
Market Outlook for Chewy and Target
- Chewy Sales Growth: Despite a shift back to in-store shopping post-pandemic, Chewy continues to see sales growth, with a forecasted revenue increase of 6% for fiscal 2025 and 8% for fiscal 2026, indicating a positive impact from new business lines.
- Target Transformation Plan: The new CEO has announced a $5 billion investment in store remodeling and technology upgrades, with an expected sales increase of about 2% for fiscal 2026, signaling a potential turnaround after years of declining performance.
- Stock Price Attractiveness: Chewy's current P/E ratio stands at 52, which is high compared to the S&P 500's 29, but its forward P/E of 16, combined with consistent revenue growth, makes the stock more appealing to investors.
- Target's Stable Dividends: Target has raised its dividend for 54 consecutive years, currently offering $4.56 per share annually, resulting in a yield of 3.9%, significantly higher than the S&P 500's 1.2%, providing investors with a reliable return.
See More
Chewy's 23% Stock Price Decline Analysis
- Revenue Growth: Chewy's revenue surged from $4.8 billion in fiscal 2019 to $10.1 billion in fiscal 2022, showcasing significant growth driven by increased pet product demand during the pandemic, although this momentum has slowed as life normalizes.
- Active Customer Growth: As of Q3 fiscal 2025, Chewy's active customer count rose by 4.9% year-over-year to 21.2 million, with sales per active customer also increasing to $595, indicating effective strategies in customer retention and sales growth.
- Delivery Service Revenue: Revenue from Chewy's delivery service grew by 13.6% to $2.6 billion, demonstrating success in maintaining customer loyalty and providing a stable revenue stream, despite an overall revenue growth rate of 8.3%.
- Valuation Analysis: Despite the stock price drop, Chewy's P/E ratio remains at 52, significantly higher than the S&P 500's 29, reflecting high market expectations for future growth, prompting investors to carefully assess the investment opportunity.
See More
Chewy's Stock Underperformance Amidst Modest Growth
- Stock Underperformance: Chewy's stock has dropped approximately 23% this year, significantly underperforming the S&P 500 by about 22 percentage points, indicating investor concerns regarding its future growth prospects.
- Modest Revenue Growth: Although Chewy's revenue reached $10.1 billion in fiscal 2022, up from $4.8 billion in 2019, the growth rate has slowed to 8.3% as life returns to normal post-pandemic, raising questions about the sustainability of this growth.
- Increased Customer Engagement: As of Q3 fiscal 2025, Chewy's active customer base grew by 4.9% year-over-year to 21.2 million, with sales per active customer also rising to $595, demonstrating some success in customer retention and acquisition efforts.
- Valuation Risks: With a price-to-earnings ratio of 52, down from 68 at the end of 2025 but still significantly above the S&P 500's 29, the market reflects high growth expectations for Chewy, suggesting that failure to meet these expectations could lead to further stock price declines.
See More
Chewy Stock Pullback May Present Buying Opportunity
- Strong Sales Growth: Chewy has achieved over 8% revenue growth each quarter in the past fiscal year, with an 8.3% increase in the last quarter, demonstrating robust performance in the pet food and essentials market, particularly with a 16% year-over-year spending increase from autoship customers.
- Attractive Valuation: Despite deriving 84% of its sales from autoship customers and primarily selling necessities, Chewy's forward P/E ratio stands at just 16.5 times, significantly lower than peers like Walmart and Costco, indicating that its stock is appealing in the current market.
- Margin Improvement: By introducing a paid membership program and expanding private label offerings, Chewy increased its gross margin by 50 basis points to 29.8% in Q3, while its EBITDA margin expanded by 100 basis points to 5.8%, reflecting the company's efforts to enhance operational efficiency.
- Sustained Growth Potential: Although user growth shows signs of maturation, Chewy is still on track to achieve its 10% EBITDA margin goal, and with its stable revenue model and attractive valuation, it presents significant investment value in the market.
See More
Chewy Stock Analysis: Attractive Growth Opportunity
- Strong Sales Growth: Chewy has achieved over 8% revenue growth each quarter in the past year, with an 8.3% increase in the last quarter, indicating robust demand in the pet food and essentials market, particularly with a 16% rise in spending from autoship customers.
- Attractive Valuation: With a forward P/E ratio of just 16.5, significantly lower than peers like Walmart and Costco, Chewy's valuation presents a compelling buying opportunity for investors looking for defensive retail stocks.
- Margin Improvement: By introducing a paid membership program and expanding private label offerings, Chewy has increased its gross margin by 50 basis points to 29.8% in Q3, while its EBITDA margin rose by 100 basis points to 5.8%, reflecting the company's focus on operational efficiency.
- Expanding Customer Base: Chewy's active customer base continues to grow, with average annual spending nearing $600, and despite signs of maturing user growth, overall sales remain strong, positioning the company to achieve its 10% EBITDA margin goal in the coming years.
See More
