company background image
CHWY

Chewy NYSE:CHWY Stock Report

Last Price

US$30.72

Market Cap

US$13.0b

7D

-3.3%

1Y

-54.4%

Updated

01 Oct, 2022

Data

Company Financials +
CHWY fundamental analysis
Snowflake Score
Valuation3/6
Future Growth5/6
Past Performance0/6
Financial Health4/6
Dividends0/6

CHWY Stock Overview

Chewy, Inc., together with its subsidiaries, engages in the pure play e-commerce business in the United States.

Rewards

Trading at 43.6% below our estimate of its fair value

Earnings are forecast to grow 61.08% per year

Risk Analysis

No risks detected for CHWY from our risk checks.

Chewy Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Chewy
Historical stock prices
Current Share PriceUS$30.72
52 Week HighUS$80.58
52 Week LowUS$22.22
Beta0.44
1 Month Change-9.30%
3 Month Change-17.40%
1 Year Change-54.42%
3 Year Change18.79%
5 Year Changen/a
Change since IPO-12.20%

Recent News & Updates

Sep 08

Chewy: Still Too Pricey Despite The Drop

Summary Chewy's stock price was pushed to astronomical highs during the COVID bubble and has now crashed over 72%. The company meanwhile operated well and managed to attract many new customers during the pandemic. Despite being down by much, I believe CHWY stock still trades at an unreasonable premium vs. peers and will likely suffer from a market saturation of pet owners. Editor's note: Seeking Alpha is proud to welcome Alessio Pace as a new contributor. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Active contributors also get free access to SA Premium. Click here to find out more » Chewy (CHWY) is a leading online retailer of pet food, treats, supply and medication in the United States. The company has an incredible focus on the customer satisfaction, famously delivering hand-crafted notes to customers that suffered the loss of their favorite pets when trying to return unopened food supply. This strive for customer excellence has definitely been one of the pillars of Chewy's success, which managed to attract about 20.5 million active customers as per their latest Q2 2022 earnings release. The company has seen staggering revenue growth since going public as well as early signs of reaching economy of scale; however, my thesis is that Chewy's future will be one of slower growth primarily due to the limited number of untapped US households that has a pet and fierce competition. Let's see more in detail why that is the case. From boom to bust Over the past few years, Chewy stock has experienced a real roller coaster of volatility. Once the COVID pandemic hit the world, the stock market quickly adjusted to the new trends, and Chewy was immediately elected to the pantheon of the so-called "stay at home" stocks, enjoying meteoric rises. From the depth of the COVID bottom (March 2020) to the zenith of the "Everything bubble" around February 2021, Chewy's stock was pumped to an incredible high of around $118 per share, up over 355%. Unfortunately, from that moment onwards the story was much different and the stock deflated to much more normal levels, crashing to today's value of about $33 per share for a staggering loss in value of about -72%. Despite the incredible losses Chewy still trades today for a relatively high valuation, making it a somewhat risky bet especially considering the wild uncertainties of today's macro environment. If we try to ignore the crazy stock movements and only focus on the business we would actually see a very upbeat story. Over the past 5 years, Chewy indeed grew revenue on an average clip of about 44% per year reaching quarterly sales of $2.43 billion in the last Q2 2022, an astounding growth for any type of retailer. Unfortunately, the same cannot be said about the company's profitability: since becoming public in 2016, Chewy was never Net Income GAAP profitable, while also generating negative Free Cash Flow in each year except 2021, an exceptionally positive time considering the impact of COVID on consumer trends and the general overheating of anything related to e-commerce. Despite that, 2021 only saw a modest $8 million of free cash flow, basically, breakeven. This should not hide the fact that every metric is actually trending in the right direction. Between 2018 and 2021, Chewy's gross margin improved from 17.47% to 25.48% while net income margin improved from -16.07% to a much better looking -1.29%. This is a clear indication that Chewy is reaping benefits of economy of scale, which should meaningfully improve the business performance in the future assuming that there is still substantial market share to gain from either an expanding Total Addressable Market or simply by attracting more customers and performing better than competitors. The margin improvement is also a clear testimony of the success of Chewy in managing private labels and the launch of automated fulfilment centers, of which the company now owns and operates three. Both initiatives have helped the company lower costs over the years, which is reflected in the margin improvement. The future might not be so favorable My main concern with Chewy's stock is a combination of a potential saturation of the available market plus a valuation that seems too optimistic even after seeing the stock price falling 72% from all-time highs. According to the American Pet Products Association, or APPA, 90.5 million families (or about 70% of total US households) own at least one pet. During the COVID pandemic a common narrative that also indubitably boosted Chewy's stock price was that with so many people leaving the cramped city apartments for more convenient, working-from-home suburban houses, many more people would seek the comfort of having a new pet added to the family. Indeed the same survey conducted by APPA in 2019 showed that 67% of US households owned pets, which means that over the course of the pandemic there was a meaningful rise of pet adoptions. It is however worth mentioning that between 2008 and 2019 the number of US families that owned a pet increased only from 62% to 68%. The data clearly suggests we are approaching a saturation point, and that excluding one-off events such as a global pandemic the trend will probably stabilize for the future. As mentioned at the beginning of the article, Chewy has already over 20 million active customers. If we factor in the main competitors, we can see how it won't be easy at all to attract new customers forward. Petco (WOOF), which operates over 1,500 stores since the 1960s and is arguably Chewy's main competitor, recently disclosed about 24.1 million active customers. BARK (BARK), a recent IPO focused on dog owners, claims to have 2.3 million subscriptions. The big elephant in the room, as it is often the case, might also be Amazon (AMZN). We cannot know for sure how many customers use Amazon for pet-related products but we can definitely assume that it is a meaningful number. Overall it appears to me that the market seems somewhat saturated already. I would not bet my money on any meaningful expansion of the number of US households that own pets, hence the only way to improve the TAM for Chewy would be to steal market share from its competitors or open new adjacent businesses. Possible, but hard and expensive. Pet ownership in US since 1988 to 2020 (Statista) Chewy is indeed trying to expand into new businesses such as pet health, with the launch of the insurance CarePlus into 31 States in the US during this quarter. As highlighted by management in the latest shareholder letter, the initiative will have no financial impact in fiscal year 2022 but will play an increasingly important role for the future of customer retention and increase in TAM. This will be an endeavor to keep an eye on in 2023 and beyond, as it might help Chewy penetrate a new market which also carries much higher margins than the retail business. Chewy valuation - expensive compared to peers If the concerns of a saturated market overall were not enough, Chewy's valuation currently is still quite rich. We are obviously very far from the astronomical valuations that the stock reached in 2021 at the peak of the bubble; however, current levels might not really indicate a positive risk-reward scenario. Due to the company being unprofitable, there is no PE ratio to be used. The Price to Free Cash Flow is also currently useless as the company is reporting high CAPEX expenditures in an attempt to open new, automated fulfilment centers. In 2021, when Chewy managed to post positive free cash flow, the ratio was over 200, clearly distorted by the inflated stock price. On a price to sales ratio, the stock appears more reasonably priced at about 1.50. When comparing Chewy's valuation to Petco, however, Chewy is currently trading at a clear premium. Petco currently is traded at about P/E of 33, P/S of 0.65 and P/FCF of around 90. And this is for a company that is well established, already profitable and with astonishingly better gross margins that Chewy (currently 41.79% vs. 26.70%).

Sep 03
Chewy's (NYSE:CHWY) Recovery Lies in Balance Between Profit Margins and Customer Retention

Chewy's (NYSE:CHWY) Recovery Lies in Balance Between Profit Margins and Customer Retention

Over 3 years since its market debut, Chewy, Inc. (NYSE: CHWY) is back at the baseline as it trades around the price levels where it IPO'd. During that time, the company more than doubled its revenues, yet consistent performance seems to elude it.

Shareholder Returns

CHWYUS Online RetailUS Market
7D-3.3%-0.4%-2.5%
1Y-54.4%-37.1%-23.2%

Return vs Industry: CHWY underperformed the US Online Retail industry which returned -37.1% over the past year.

Return vs Market: CHWY underperformed the US Market which returned -23.2% over the past year.

Price Volatility

Is CHWY's price volatile compared to industry and market?
CHWY volatility
CHWY Average Weekly Movement8.4%
Online Retail Industry Average Movement10.7%
Market Average Movement6.9%
10% most volatile stocks in US Market15.6%
10% least volatile stocks in US Market2.8%

Stable Share Price: CHWY is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: CHWY's weekly volatility (8%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
201021,300Sumit Singhhttps://www.chewy.com

Chewy, Inc., together with its subsidiaries, engages in the pure play e-commerce business in the United States. The company provides pet food and treats, pet supplies and pet medications, and other pet-health products, as well as pet services for dogs, cats, fish, birds, small pets, horses, and reptiles through its www.chewy.com retail Website, as well as its mobile applications. It offers approximately 100,000 products from 3,000 partner brands.

Chewy Fundamentals Summary

How do Chewy's earnings and revenue compare to its market cap?
CHWY fundamental statistics
Market CapUS$12.99b
Earnings (TTM)-US$55.03m
Revenue (TTM)US$9.46b

1.4x

P/S Ratio

-236.0x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
CHWY income statement (TTM)
RevenueUS$9.46b
Cost of RevenueUS$6.92b
Gross ProfitUS$2.54b
Other ExpensesUS$2.60b
Earnings-US$55.03m

Last Reported Earnings

Jul 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-0.13
Gross Margin26.86%
Net Profit Margin-0.58%
Debt/Equity Ratio0%

How did CHWY perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is CHWY undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

  • Price-To-Sales vs Peers

  • Price-To-Sales vs Industry

  • Price-To-Sales vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for CHWY?

Other financial metrics that can be useful for relative valuation.

CHWY key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue1.4x
Enterprise Value/EBITDA-3157.8x
PEG Ration/a

Price to Sales Ratio vs Peers

How does CHWY's PS Ratio compare to its peers?

CHWY PS Ratio vs Peers
The above table shows the PS ratio for CHWY vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPSEstimated GrowthMarket Cap
Peer Average2.8x
ETSY Etsy
5.3x14.0%US$12.7b
EBAY eBay
2x4.9%US$20.2b
DASH DoorDash
3.4x17.4%US$19.1b
VIPS Vipshop Holdings
0.3x5.6%US$5.3b
CHWY Chewy
1.4x11.9%US$13.0b

Price-To-Sales vs Peers: CHWY is good value based on its Price-To-Sales Ratio (1.4x) compared to the peer average (2.8x).


Price to Earnings Ratio vs Industry

How does CHWY's PE Ratio compare vs other companies in the US Online Retail Industry?

Price-To-Sales vs Industry: CHWY is expensive based on its Price-To-Sales Ratio (1.4x) compared to the US Online Retail industry average (0.7x)


Price to Sales Ratio vs Fair Ratio

What is CHWY's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

CHWY PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio1.4x
Fair PS Ratio1.1x

Price-To-Sales vs Fair Ratio: CHWY is expensive based on its Price-To-Sales Ratio (1.4x) compared to the estimated Fair Price-To-Sales Ratio (1.1x).


Share Price vs Fair Value

What is the Fair Price of CHWY when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: CHWY ($30.72) is trading below our estimate of fair value ($54.44)

Significantly Below Fair Value: CHWY is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


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Future Growth

How is Chewy forecast to perform in the next 1 to 3 years based on estimates from 21 analysts?

Future Growth Score

5/6

Future Growth Score 5/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


61.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CHWY is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.9%).

Earnings vs Market: CHWY is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: CHWY is expected to become profitable in the next 3 years.

Revenue vs Market: CHWY's revenue (11.9% per year) is forecast to grow faster than the US market (7.7% per year).

High Growth Revenue: CHWY's revenue (11.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CHWY's Return on Equity is forecast to be very high in 3 years time (48%).


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Past Performance

How has Chewy performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


62.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: CHWY is currently unprofitable.

Growing Profit Margin: CHWY is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: CHWY is unprofitable, but has reduced losses over the past 5 years at a rate of 62.7% per year.

Accelerating Growth: Unable to compare CHWY's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: CHWY is unprofitable, making it difficult to compare its past year earnings growth to the Online Retail industry (-34.2%).


Return on Equity

High ROE: CHWY has a negative Return on Equity (-46.88%), as it is currently unprofitable.


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Financial Health

How is Chewy's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Stable Cash Runway

  • Forecast Cash Runway

Financial Position Analysis

Short Term Liabilities: CHWY's short term assets ($1.5B) do not cover its short term liabilities ($1.8B).

Long Term Liabilities: CHWY's short term assets ($1.5B) exceed its long term liabilities ($472.8M).


Debt to Equity History and Analysis

Debt Level: CHWY is debt free.

Reducing Debt: CHWY has not had any debt for past 5 years.


Balance Sheet


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: CHWY has sufficient cash runway for more than 3 years based on its current free cash flow.

Forecast Cash Runway: Insufficient data to determine if CHWY has enough cash runway if its free cash flow continues to grow or shrink based on historical rates.


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Dividend

What is Chewy current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Chewy Dividend Yield vs Market
How does Chewy dividend yield compare to the market?
SegmentDividend Yield
Company (Chewy)n/a
Market Bottom 25% (US)1.7%
Market Top 25% (US)4.7%
Industry Average (Online Retail)1.1%
Analyst forecast in 3 Years (Chewy)0%

Notable Dividend: Unable to evaluate CHWY's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate CHWY's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if CHWY's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if CHWY's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as CHWY has not reported any payouts.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

4.3yrs

Average management tenure


CEO

Sumit Singh (42 yo)

3.42yrs

Tenure

US$12,450,338

Compensation

Mr. Sumit singh serves as Independent Director at Booking Holdings Inc. since June 09, 2022. Mr. Singh has been Chief Executive Officer of Chewy, Inc. since March 2018 and its Director since April 29, 2019...


CEO Compensation Analysis

Sumit Singh's Compensation vs Chewy Earnings
How has Sumit Singh's remuneration changed compared to Chewy's earnings?
DateTotal Comp.SalaryCompany Earnings
Jul 31 2022n/an/a

-US$55m

May 01 2022n/an/a

-US$94m

Jan 30 2022US$12mUS$1m

-US$74m

Oct 31 2021n/an/a

US$11m

Aug 01 2021n/an/a

US$10m

May 02 2021n/an/a

-US$6m

Jan 31 2021US$3mUS$1m

-US$92m

Nov 01 2020n/an/a

-US$174m

Aug 02 2020n/an/a

-US$221m

May 03 2020n/an/a

-US$271m

Feb 02 2020US$150mUS$1m

-US$252m

Nov 03 2019n/an/a

-US$258m

Aug 04 2019n/an/a

-US$257m

May 05 2019n/an/a

-US$238m

Feb 03 2019US$1mUS$1m

-US$268m

Compensation vs Market: Sumit's total compensation ($USD12.45M) is about average for companies of similar size in the US market ($USD13.04M).

Compensation vs Earnings: Sumit's compensation has increased whilst the company is unprofitable.


Leadership Team

Experienced Management: CHWY's management team is considered experienced (4.3 years average tenure).


Board Members

Experienced Board: CHWY's board of directors are considered experienced (3.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

NYSE:CHWY Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
14 Jun 22SellUS$1,633,019Satish MehtaIndividual60,075US$27.18
14 Jun 22SellUS$1,981,749Mario MarteIndividual72,904US$27.18
14 Jun 22SellUS$1,012,866Susan HelfrickIndividual37,261US$27.18
14 Jun 22SellUS$703,469Stacy BowmanIndividual25,879US$27.18
14 Jun 22SellUS$4,625,296Sumit SinghIndividual170,154US$27.18
13 Jun 22BuyUS$4,980,016Downstream Partners LPCompany181,478US$27.48
06 Jun 22BuyUS$1,000,956James StarIndividual36,127US$27.71
06 Jun 22BuyUS$4,003,853Downstream Partners LPCompany144,509US$27.71
21 Dec 21BuyUS$1,793,990James StarIndividual32,278US$56.15
15 Dec 21SellUS$1,460,392Stacy BowmanIndividual26,682US$54.85
15 Dec 21SellUS$1,825,354Susan HelfrickIndividual33,350US$54.85
15 Dec 21SellUS$3,650,707Mario MarteIndividual66,700US$54.85
15 Dec 21SellUS$8,335,928Sumit SinghIndividual152,301US$54.85
15 Dec 21SellUS$3,085,970Satish MehtaIndividual56,382US$54.85

Ownership Breakdown

What is the ownership structure of CHWY?
Owner TypeNumber of SharesOwnership Percentage
Individual Insiders1,826,9000.4%
Institutions110,289,21325.0%
Private Companies329,098,44174.6%

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Top 25 shareholders own 97.24% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
77.78%
Argos Holdings L.P
328,772,454$10.1b0%no data
4.79%
Morgan Stanley Investment Management Inc.
20,240,082$621.8m-0.38%0.52%
3.91%
Baillie Gifford & Co.
16,533,230$507.9m30.51%0.28%
1.71%
The Vanguard Group, Inc.
7,210,922$221.5m2.7%0.01%
1.64%
Brown Advisory Incorporated
6,916,428$212.5m-9.84%0.4%
1.07%
Wellington Management Group LLP
4,521,306$138.9m-15.8%0.03%
0.68%
Columbia Management Investment Advisers, LLC
2,859,655$87.8m28.47%0.03%
0.59%
BlackRock, Inc.
2,506,373$77.0m7.61%no data
0.52%
Two Sigma Investments, LP
2,188,285$67.2m0%0.26%
0.49%
Marshall Wace LLP
2,071,482$63.6m34.26%0.18%
0.37%
J.P. Morgan Asset Management, Inc.
1,567,825$48.2m44.02%0.01%
0.34%
Samlyn Capital, LLC
1,418,397$43.6m0%0.91%
0.33%
Macquarie Investment Management Business Trust
1,413,446$43.4m-62.71%0.05%
0.33%
BNY Mellon Asset Management
1,412,704$43.4m900.42%0.01%
0.3%
State Street Global Advisors, Inc.
1,250,404$38.4m4.24%no data
0.29%
Managed Account Advisors LLC
1,222,477$37.6m11.13%0.01%
0.28%
Goldman Sachs Group, Investment Banking and Securities Investments
1,193,527$36.7m-50.75%0.03%
0.27%
Neuberger Berman Investment Advisers LLC
1,129,539$34.7m-40.11%0.04%
0.25%
Frontier Capital Management Co LLC
1,047,459$32.2m26.8%0.34%
0.24%
D. E. Shaw & Co., L.P.
1,018,068$31.3m216.34%0.06%
0.24%
Mitsubishi UFJ Trust and Banking Corporation, Asset Management Arm
994,329$30.5m36.83%0.04%
0.22%
Bank of America Corporation, Asset Management Arm
926,490$28.5m46.89%0.01%
0.21%
AHL Partners LLP
903,385$27.8m222.74%0.6%
0.21%
American Century Investment Management Inc
868,888$26.7m0.44%0.02%
0.2%
Millennium Management LLC
850,746$26.1m295.25%0.04%

Company Information

Chewy, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Chewy, Inc.
  • Ticker: CHWY
  • Exchange: NYSE
  • Founded: 2010
  • Industry: Internet and Direct Marketing Retail
  • Sector: Retail
  • Implied Market Cap: US$12.986b
  • Shares outstanding: 422.72m
  • Website: https://www.chewy.com

Number of Employees


Location

  • Chewy, Inc.
  • 1855 Griffin Road
  • Suite B-428
  • Dania Beach
  • Florida
  • 33004
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CHWYNYSE (New York Stock Exchange)YesClass A Common StockUSUSDJun 2019
CHWY *BMV (Bolsa Mexicana de Valores)YesClass A Common StockMXMXNJun 2019

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/10/01 00:00
End of Day Share Price2022/09/30 00:00
Earnings2022/07/31
Annual Earnings2022/01/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.