Last Updated: 11 Nov 2024
Executive Summary
Chewy Inc. (CHWY) is a leading online retailer specializing in pet supplies. The company has experienced strong growth in recent years, driven by the increasing popularity of online shopping and the growing pet ownership trend. Chewy's financial performance has been solid, with revenue and earnings growing consistently. The company's valuation is currently attractive, trading at a discount to its peers. Analysts are generally positive on Chewy, with a majority recommending a buy rating.
Company Overview
Chewy Inc. was founded in 2011 and is headquartered in Dania Beach, Florida. The company sells a wide range of pet supplies, including food, toys, treats, and accessories. Chewy offers a convenient and affordable shopping experience, with free shipping on orders over $49. The company has a strong customer base, with over 20 million active customers.
Fundamental Analysis
Chewy's financial performance has been strong in recent years. Revenue has grown at a compound annual growth rate (CAGR) of 25% over the past three years. Earnings per share (EPS) has also grown at a CAGR of 20% over the same period. The company's gross margin has remained stable at around 25%. Chewy's operating margin has improved in recent years, reaching 1.12% in the latest quarter.
Chewy's balance sheet is strong, with the company having a large cash balance and no debt. The company's cash flow from operations has been positive in recent years, providing the company with the financial flexibility to invest in growth initiatives.
Technical Analysis
Chewy's stock price has been in a downtrend since reaching a high of $39.10 in November 2021. The stock is currently trading at $30.67, below its 50-day and 200-day moving averages. The relative strength index (RSI) is below 50, indicating that the stock is oversold. The moving average convergence divergence (MACD) is also below zero, indicating that the stock is in a bearish trend.
Short Term Outlook
The technical analysis suggests that Chewy's stock is likely to continue to trade in a downtrend in the short term. The stock is currently below its key moving averages and the RSI is oversold. The MACD is also below zero, indicating that the stock is in a bearish trend.
Long Term Outlook
The long-term outlook for Chewy is positive. The company is a leader in the online pet supplies market, which is expected to grow at a CAGR of 10% over the next five years. Chewy has a strong financial position and a loyal customer base. The company is also well-positioned to benefit from the growing trend of pet ownership.
Analyst Recommendations
Analysts are generally positive on Chewy, with a majority recommending a buy rating. The average analyst target price is $31.56, which represents a potential upside of 2.9% from the current price.
