Key TakeawaysSprouts Farmers Market, Deckers Outdoor, Chewy and Torrid Holdings are strong retail stocks to buy now.Retail stocks may gain as US consumer confidence has grown for the past two months, hitting an 18-month high.Register now to see our 7 Best Stocks for the Next 30 Days report - free today!U.S. consumer confidence — a key determinant of the economy’s health — improved in back-to-back months. According to the Conference Board, the Consumer Confidence Index surged to 111.7 in November 2024, follo ...

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Chewy, driven by higher revenues, with a focus on how actual results compare to estimates impacting stock price [1][2] Earnings Expectations - Chewy is expected to report quarterly earnings of $0.23 per share, reflecting a year-over-year increase of +53.3% [3] - Revenues are projected to be $2.86 billion, representing a 4.4% increase from the same quarter last year [4] Estimate Revisions - The consensus EPS estimate has been revised 10.53% higher in the last 30 days, indicating a positive reassessment by analysts [5] - The Most Accurate Estimate for Chewy is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +2.67% [11][12] Earnings Surprise Prediction - A positive Earnings ESP is a strong indicator of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [9] - Chewy currently holds a Zacks Rank of 2, suggesting a high likelihood of beating the consensus EPS estimate [12][13] Historical Performance - Chewy has consistently beaten consensus EPS estimates, achieving this in the last four quarters [15] - In the last reported quarter, Chewy exceeded expectations by delivering earnings of $0.24 per share against an expected $0.22, resulting in a surprise of +9.09% [14] Conclusion - Chewy is positioned as a compelling candidate for an earnings beat, but investors should consider additional factors beyond earnings results when making investment decisions [18]

Company Performance - Chewy (CHWY) has returned 46.5% year-to-date, outperforming the Retail-Wholesale sector average of 27.8% [4] - The Zacks Consensus Estimate for Chewy's full-year earnings has increased by 39.1% over the past 90 days, indicating improved analyst sentiment [3] - Chewy currently holds a Zacks Rank of 2 (Buy) [3] Industry Comparison - Chewy belongs to the Internet - Commerce industry, which has 39 stocks and is ranked 74 in the Zacks Industry Rank [5] - The Internet - Commerce industry has gained an average of 32.1% year-to-date, with Chewy outperforming this average [5] - Petco Health & Wellness (WOOF), another Retail-Wholesale stock, has returned 33.9% year-to-date, also outperforming the sector average [4] Peer Analysis - Petco Health & Wellness falls under the Retail - Miscellaneous industry, which has 17 stocks and is ranked 163 in the Zacks Industry Rank [6] - The Retail - Miscellaneous industry has declined by 2.3% year-to-date, while Petco Health & Wellness has shown positive performance [6] - Petco Health & Wellness' consensus EPS estimate for the current year has increased by 4.1% over the past three months and holds a Zacks Rank of 2 (Buy) [5] Sector Overview - The Retail-Wholesale group consists of 210 companies and is ranked 7 within the Zacks Sector Rank [2] - The Zacks Sector Rank includes 16 groups, ranked based on the average Zacks Rank of individual companies within each sector [2]

Retail investors often feel on the outside of the stock market since information can often be hard to access and digest when the factors and trends to be identified aren’t too clear-cut. This is why looking at Wall Street analyst actions can be an important checklist for retail investors when looking at potential opportunities to put their capital to work. What is especially important to keep in mind is that analysts talk to each other, and they more or less have assumptions in mind that drive these stock v ...

Group 1 - Chewy (CHWY) is well-positioned to maintain its earnings-beat streak, with an average surprise of 28.35% over the past two quarters [1][3] - In the last reported quarter, Chewy's earnings were $0.24 per share, exceeding the Zacks Consensus Estimate of $0.22 per share, resulting in a surprise of 9.09% [2] - The previous quarter saw Chewy outperform expectations significantly, reporting earnings of $0.31 per share against an estimate of $0.21 per share, leading to a surprise of 47.62% [2] Group 2 - Chewy's estimates have been trending higher due to its history of earnings surprises, and it currently has a positive Earnings ESP of +3.23% [3][6] - The combination of a positive Earnings ESP and a Zacks Rank 3 (Hold) indicates a strong potential for another earnings beat, with the next report expected on December 4, 2024 [6] - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [4]

Analyst Upgrade and Price Target - Bank of America analyst Curtis Nagle double upgrades Chewy shares from Underperform to Buy and raises the price target from $24 to $40 [1] - The upgrade is based on improving industry trends and earnings potential [2] Industry Trends and Growth - Animal shelters are taking in a large number of pets, but adoption trends have improved since the start of 2024 [3] - Pet spending appears to have bottomed after being negative year-over-year earlier this year [3] - Industry is expected to return to consistent low single-digit to mid single-digit (LSD%-MSD%) growth in the first half of 2025 [3] - Chewy's website traffic was up 6% year over year in the third quarter compared to down 11% year over year in the first quarter [3] Earnings and Expense Discipline - Chewy's expense discipline could lead to earnings growth that is being underestimated by investors and other analysts [2] - Since cost cuts in late 2023, Chewy has demonstrated strong expense discipline in SG&A and has scaled fulfillment expenses [4] - Advertising and health growth opportunities come with higher gross margins and could lead to significant earnings growth in the coming years [4] Business Model and Market Position - Chewy's subscription-like model should command a premium [5] - The company's low exposure to discretionary categories minimizes the impact of increased Chinese tariffs [5] - Chewy is predicted to beat the third-quarter Street estimate of 50,000 net adds for active customers, given pet industry trends and website traffic [5] - Over the last 10 quarters, the active customer count has been a leading indicator of stock movement [5] Stock Performance - Chewy stock is up 4 3% to $34 37 on Wednesday, versus a 52-week trading range of $14 68 to $39 10 [6] - Chewy stock is up 55% year-to-date in 2024 [6]

Core Insights - Chewy Inc (NYSE:CHWY) has experienced a 4.9% increase in stock price, reaching $34.54, following a double-upgrade from BofA Global Research to "buy" from "underperform," with a price target raised to $40 from $24 [1] - The firm highlighted an increase in pet adoption rates since the beginning of the year, while pet spending has hit a low point, indicating potential for a rebound [1] - Increased web traffic has also contributed to the positive outlook for Chewy [1] Stock Performance - The stock has surpassed the $34 mark, which had previously limited rallies in mid-September and earlier this month [2] - Year-to-date, Chewy's equity has risen by 45.7%, supported by long-term support at the 120-day moving average since May [2] Options Activity - In the options market, call options are currently more favorable, with 9,575 calls traded today, while 3,766 puts exchanged represent double the typical put volume [3] - The most popular option is the weekly 11/22 34-strike call, with new positions being opened [3] - Over the past 10 weeks, options traders have shown increased bullish sentiment, with a 50-day call/put volume ratio of 5.55, ranking higher than all other readings in its annual range [4] Volatility and Pricing - Options for Chewy are currently reasonably priced, with a Schaeffer's Volatility Index (SVI) of 69%, which ranks in the 25th percentile of readings from the past 12 months, indicating low volatility expectations [5]

Core Viewpoint - Chewy Inc. has seen a remarkable stock increase of 95.5% over the past six months, establishing itself as a leader in the pet-focused e-commerce market, driven by the demand for subscription-based pet products [1] Group 1: Stock Performance - Chewy's stock closed at $32.96, which is 15.7% below its 52-week high of $39.10 reached on June 27, 2024 [3] - The stock has significantly outperformed the industry, which rose by 14.5%, as well as the Retail-Wholesale sector and the S&P 500 index, which gained 14.7% and 14.4% respectively [1] Group 2: Growth Drivers - Chewy's growth is supported by strong financial performance, strategic investments, and favorable market trends, including an expanding customer base and a recurring revenue model [5] - The Autoship program has been a key contributor, with a 5.8% year-over-year sales increase in Q2 2024, accounting for 78.4% of total net sales [7] - The expansion into veterinary care has resulted in the opening of two additional clinics, increasing the total to six, which enhances customer loyalty and contributes to a record Net Sales Per Active Customer (NSPAC) of $565, reflecting a 6.2% year-over-year growth [8] - Chewy's Sponsored Ads business is on track to reach its long-term target of 1% to 3% of net sales by the end of 2024, driven by increased inventory and advertiser demand [9] - The mobile app improvements led to a 13% year-over-year increase in unique customers placing orders and a 15% rise in overall mobile app orders [10] Group 3: Challenges and Market Dynamics - Despite its growth, Chewy faces challenges such as slowing growth, potential customer acquisition saturation, and rising cost pressures [11] - The active customer count showed only a modest increase, with expectations for flat growth in 2024 [11] - Chewy operates in a price-sensitive market, where competitors can quickly adjust pricing strategies, and inflationary pressures could impact margins [12] - The forward 12-month price-to-earnings ratio for Chewy stands at 27.18, higher than the industry average of 25.36 and the S&P 500's 22.7, indicating potential overvaluation [13] Group 4: Strategic Initiatives - Chewy's strategic initiatives, including the Autoship program, veterinary clinic expansion, and mobile app enhancements, have strengthened customer loyalty and boosted recurring revenues [14] - However, high operational costs and competition from companies like Petco, Central Garden & Pet, and BARK pose ongoing challenges [15]

Core Viewpoint - The pet industry is experiencing significant growth, with Chewy and Freshpet being two companies that have capitalized on this trend. Freshpet is considered the better buy due to its stronger growth rate compared to Chewy [1][12]. Group 1: Business Models - Chewy is a leading e-commerce company in the pet industry, known for its autoship program and a wide range of products, totaling about 115,000 stock-keeping units (SKUs) from 3,500 brands [3][4]. - Freshpet specializes in fresh, refrigerated pet food, with its products available in over 26,000 stores, focusing on premium quality to meet consumer demand [5][6]. - Both companies have established competitive advantages, with Chewy dominating e-commerce and Freshpet leading in fresh pet food [7]. Group 2: Financial Performance - Chewy reported a revenue growth of only 2.6% in the second quarter, reaching $2.86 billion, indicating a slowdown in growth compared to previous periods [8][9]. - In contrast, Freshpet achieved a remarkable 26% revenue growth to $253.4 million, marking its 25th consecutive quarter of at least 25% growth, alongside significant margin expansion [10]. Group 3: Valuation - Chewy has a price-to-earnings (P/E) ratio of 28, influenced by substantial stock-based compensation, while Freshpet's P/E ratio is significantly higher at 170 due to its growth track record [11]. - Neither company pays a dividend, which is a consideration for investors [11]. Group 4: Investment Recommendation - Freshpet is viewed as the better investment option due to its robust growth and effective scaling with new manufacturing capabilities, while Chewy is facing challenges in finding new growth avenues [12][13].

Many investors have no idea that this huge business is a major player in the pet space.The online pharmacy space for pets is growing at a strong rate and that's good news for Chewy (CHWY 6.34%). The company operates the go-to e-commerce platform for pets. Most investors are likely aware that it generates billions of dollars of sales annually from retail products. But fewer realize that pet health is a big business for Chewy as well.In 2023, Chewy Health was a business worth more than $3 billion, according t ...