Chewy shares have climbed in the double digits this year.When looking for top-performing stocks these days, you might immediately think of technology players. After all, the theme of artificial intelligence (AI) has been driving market growth for a while now, as companies like chipmaker Nvidia and software player Palantir Technologies have soared. But tech isn't the only place to search for players that can deliver double- or triple-digit increases.One particular company, Chewy (CHWY 2.78%), is proving that ...

Analysts on Wall Street project that Chewy (CHWY) will announce quarterly earnings of $0.33 per share in its forthcoming report, representing an increase of 37.5% year over year. Revenues are projected to reach $3.08 billion, increasing 7.8% from the same quarter last year.Over the last 30 days, there has been no revision in the consensus EPS estimate for the quarter. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course of this timeframe.Ahead of a comp ...

Core Viewpoint - Chewy, Inc. is expected to report growth in both revenue and earnings for the second quarter of fiscal 2025, with sales estimated at $3.1 billion, reflecting a 7.8% increase year-over-year, and earnings per share projected at 33 cents, indicating a 37.5% growth from the previous year [1][3]. Group 1: Financial Performance - The Zacks Consensus Estimate for Chewy's quarterly sales is $3.1 billion, representing a 7.8% increase from the same quarter last year [1]. - The consensus estimate for earnings per share has remained stable at 33 cents, reflecting a year-over-year growth of 37.5% [1]. - Chewy has delivered an average earnings surprise of 8.1% over the last four quarters, with a recent surprise of 2.9% [2]. Group 2: Factors Influencing Performance - Chewy's performance is likely bolstered by its digital capabilities, product assortments, and expansion efforts, including technology upgrades to its online platforms [3]. - Increased product demand, strong consumer engagement, and growth in active customers have positively impacted results, alongside the expansion of Autoship subscriptions and healthcare services [4]. - The estimated net sales per active customer is $589, which is a 4.2% increase from the previous year [5][9]. Group 3: Challenges - The company faces challenges from a tough macroeconomic environment, including inflationary pressures and tariffs, which may have negatively impacted performance [6].

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Heading into today, shares of the online pet store had lost 5.4% over the past month, lagging the Retail- Wholesale sector's gain of 1.54% and the S&P 500's gain of 2%. Investors will be eagerly watching for the performance of Chewy in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $0.33, marking a 37.5% rise compared to the same quarter of the previous year. Simultaneously, our latest consensus estimate expects the revenue to be $3.08 billion, showing a 7.83% esc ...

Group 1 - Chewy Inc's stock has been on a downward trend since reaching a two-year high of $48.62 on June 6, but it still shows a strong year-over-year increase of 51.3% [1] - The stock is currently trading close to a historically bullish trendline, indicating a potential rebound [1] - Recent analysis shows that Chewy's stock pullback has brought it within one standard deviation of its 260-day moving average, with the stock being above this trendline in 80% of the past two months [2] Group 2 - Historical data indicates that after similar pullbacks, Chewy's stock was higher one month later 67% of the time, with an average gain of 6.9% [3] - From its current price of $34.49, a typical rebound could push the stock back above $36 [3] - The options market shows a high put/call volume ratio for Chewy, suggesting a potential sentiment shift that could provide additional support for the stock [7] Group 3 - Chewy's options are currently affordably priced, with a Schaeffer's Volatility Index (SVI) of 41%, which is in the 14th percentile of readings from the past year [7]

Core Insights - Chewy Inc. (CHWY) reported a strong performance in Q1 fiscal 2025, with net sales increasing by 8.3% year over year to $3.12 billion, surpassing guidance due to strong engagement in core categories [1][10] - The Autoship program was a significant growth driver, contributing $2.56 billion in sales, which is 82.2% of total net sales, and showing a year-over-year growth of 14.8% [2][10] - Chewy's active customer base grew to 20.8 million, reflecting a 3.8% increase, driven by effective customer acquisition strategies [2] Segment Performance - The hardgoods segment saw a year-over-year growth of 12.3%, supported by improved customer experience and faster SKU onboarding [1] - Chewy Vet Care expanded to 11 clinics across four states, with strong customer utilization, as about half of first-time customers ordered from Chewy.com within 30 days [3] - The Chewy+ membership program showed promising adoption, leading to a 3.7% increase in net sales per active customer to $583 [4] Financial Guidance and Valuation - Chewy maintained its fiscal 2025 revenue guidance of $12.3 billion to $12.45 billion, indicating a growth of 6-7% when adjusted for the previous year's extra week [5] - The company trades at a forward price-to-sales ratio of 1.17X, which is below the industry average of 2.17X, indicating potential undervaluation [11] - The Zacks Consensus Estimate for Chewy's fiscal 2025 and 2026 earnings suggests year-over-year growth of 23.1% and 19.5%, respectively, with recent upward revisions in estimates [12]

Company Performance - Chewy (CHWY) closed at $36.31, down 2.52% from the previous trading session, underperforming the S&P 500's gain of 0.4% [1] - Prior to the latest trading day, Chewy's shares had decreased by 14.23%, lagging behind the Retail-Wholesale sector's gain of 4.05% and the S&P 500's gain of 4.61% [1] Earnings Projections - The upcoming EPS for Chewy is projected at $0.33, indicating a 37.50% increase compared to the same quarter last year [2] - Revenue is forecasted to be $3.08 billion, reflecting a 7.83% growth year-over-year [2] Annual Estimates - For the annual period, earnings are anticipated to be $1.28 per share, with revenue expected at $12.48 billion, representing increases of 23.08% and 5.21% respectively from the previous year [3] - Recent changes to analyst estimates suggest positive sentiment regarding Chewy's business and profitability [3] Valuation Metrics - Chewy's Forward P/E ratio stands at 29.15, which is higher than the industry average of 23.01 [6] - The PEG ratio for Chewy is currently 3.14, compared to the Internet - Commerce industry's average PEG ratio of 1.68 [6] Industry Context - The Internet - Commerce industry, part of the Retail-Wholesale sector, holds a Zacks Industry Rank of 66, placing it in the top 27% of over 250 industries [7] - The Zacks Industry Rank indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Insights - Chewy, Inc. (CHWY) and Central Garden & Pet Company (CENT) are key players in the pet care industry, each with unique operational models and growth strategies [1] - Chewy focuses on e-commerce and customer engagement, while Central Garden & Pet emphasizes a diversified portfolio and operational efficiency [1] Chewy, Inc. (CHWY) - Chewy reported net sales of $3.12 billion in fiscal Q1 2025, an 8.3% year-over-year increase, exceeding guidance [2] - The Autoship program generated $2.56 billion in sales, accounting for 82% of total net sales, with a 14.8% year-over-year growth [3] - Active customer base grew by 3.8% year-over-year to 20.8 million, with net sales per active customer rising 3.7% to $583 [4] - Chewy Vet Care operates 11 clinics and plans to open 8-10 more in fiscal 2025, while the Chewy+ membership program shows early success [5] - Adjusted EBITDA margin for Q1 was 6.2%, but management expects a decline due to seasonality and increased marketing investments [6] - Marketing expenses reached $193.8 million, or 6.2% of sales, projected to rise to 6.7-6.8% for the year [7] Central Garden & Pet Company (CENT) - CENT's adjusted gross margin improved by 200 basis points to 33.3% in Q2, reflecting strong cost management [9][13] - E-commerce accounted for 27% of Pet segment sales, driven by new products and digital strategies [14] - The company opened a 300,000-square-foot distribution center in New Jersey, enhancing fulfillment capabilities [12] - Financially, CENT ended Q2 with $517 million in cash and no borrowings, maintaining a net leverage ratio of 1.7X [15] - The consensus estimate for CENT's fiscal 2025 sales suggests a year-over-year decline of 1.7%, while EPS is expected to grow by 17.8% [20] Comparative Analysis - Chewy's shares gained 1% over the past three months, while CENT's stock rose 19.6%, driven by strong margin expansion and cost execution [21] - Chewy's forward price-to-sales (P/S) multiple is 1.20, while CENT's is 0.85, indicating a more attractive valuation for CENT [22][23] - Central Garden & Pet is viewed as a better investment due to disciplined cost management and consistent margin expansion, while Chewy faces near-term challenges [26][27]

Core Viewpoint - Morgan Stanley's strategy team highlights 15 stocks with short-term catalytic potential, indicating that S&P 500 index earnings growth in Q2 may exceed expectations [1] Earnings Expectations - The market anticipates a 5% year-over-year increase in S&P 500 Q2 earnings per share and over 4% revenue growth, but actual growth may be stronger [1] - The seven major tech companies are expected to see a 14% increase in net profit, while the remaining 493 constituents may experience a 3% decline [1] - Despite analysts lowering earnings expectations from April to May, the earnings revision has rebounded from -25% to approximately 1%, suggesting Q2 earnings will likely exceed expectations, aligning with the historical average of 4%-5% [1] Recommended Stocks - **argenx SE (ARGX.US)**: undervalued R&D pipeline, target price $700 [2] - **Atlassian (TEAM.US)**: continuous revenue growth potential over 20% and expected margin expansion, target price $320 [3] - **Chewy (CHWY.US)**: benefits from marketing and product optimization, expected revenue to maintain or exceed Q1 levels, target price $50 [4] - **CVS Health (CVS.US)**: advantages from competitor store closures and growth in pharmacy benefit management, target price $80 [4] - **DraftKings (DKNG.US)**: potential earnings inflection point in Q2, with actual licensing rates offsetting tax and regulatory pressures, target price $52 [4] - **Eaton Corporation (ETN.US)**: benefits from improved profit margins in U.S. electrical business, target price $375 [5] - **Eli Lilly (LLY.US)**: core products Mounjaro and Zepbound expected to contribute $8.2 billion in revenue, exceeding expectations may lead to 2025 guidance upgrades, target price $1,135 [5] - **F5 (FFIV.US)**: positive outlook due to demand growth in cloud and load balancing products, target price $305 [6] - **NVIDIA (NVDA.US)**: strong end-user demand and accelerated shipments of rack-level products supporting supply-side growth, target price $170 [7] - **Omada Health (OMDA.US)**: operational leverage through technology empowerment and multi-disease sales, target price $25 [8] - **Southwest Airlines (LUV.US)**: potential stock rebound if internal guidance is met and baggage fee impacts are confirmed as limited, target price $38 [9] - **Valley National Bank (VLY.US)**: expected net interest income growth of 3% quarter-over-quarter, target price $11 [10] - **Western Digital (WDC.US)**: undervalued gross margin expansion prospects, target price $85 [11] Cautious Outlook - **National Storage Affiliates Trust (NSA.US)**: cautious due to expected funds from operations (FFO) per share being below market and company guidance, target price $30 [12] - **Teradyne (TER.US)**: revenue and earnings per share forecasts for FY2026 are 7% and 14% below Wall Street expectations, target price $74 [13] Summary - Overall, Morgan Stanley's recommendations combine company fundamentals, industry trends, and market sentiment, providing diversified options for investors [14]