Chewy, Inc. (NYSE:CHWY) shareholders might be concerned after seeing the share price drop 20% in the last month. Despite this, the stock is a strong performer over the last year, no doubt about that. During that period, the share price soared a full 196%. So some might not be surprised to see the price retrace some. The real question is whether the business is trending in the right direction.
Given that Chewy didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Chewy grew its revenue by 41% last year. That's a fairly respectable growth rate. The revenue growth is decent but the share price had an even better year, gaining 196%. Given that the business has made good progress on the top line, it would be worth taking a look at its path to profitability. But investors need to be wary of how the 'fear of missing out' could influence them to buy without doing thorough research.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Chewy is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Chewy in this interactive graph of future profit estimates.
A Different Perspective
Chewy boasts a total shareholder return of 196% for the last year. That's better than the more recent three month gain of 11%, implying that share price has plateaued recently. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 4 warning signs we've spotted with Chewy (including 1 which is concerning) .
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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