Core Viewpoint - Chewy Inc. has experienced a significant stock rally of 16% over the past three months, driven by strong financial performance, increasing consumer demand, and operational efficiencies, outpacing the industry average rise of 10.8% [1] Financial Performance - Chewy's stock closed at $37.55, which is 6.3% below its 52-week high of $40.09, but it is trading above its 50 and 200-day moving averages, indicating a bullish trend [4] - The company's Autoship program generated $2.3 billion in sales in Q3 of fiscal 2024, reflecting an 8.7% year-over-year increase, highlighting its role in ensuring predictable revenues [7] - Chewy's active customer base grew by 160,000 in Q3, reaching 20.2 million, with net sales per active customer increasing by 4.2% year-over-year to $567 [8] Market Position and Growth Opportunities - Chewy has established a strong presence in the online pet retail sector through innovation and customer loyalty, with a growing portfolio that includes veterinary and pharmacy services [6] - The entry into the veterinary services market through Chewy Vet Care provides access to a $25 billion total addressable market, with six veterinary clinics operational by Q3 [9] Challenges and Competitive Landscape - Despite a promising growth trajectory, Chewy faces potential challenges such as slowing growth, customer acquisition saturation, and rising cost pressures [10] - The adjusted EBITDA margin expanded to 4.8% in Q3, but guidance for Q4 indicates a decline to 3.4% due to increased seasonal marketing costs [11] - Chewy operates in a price-sensitive market with competitors quickly adjusting pricing strategies, and inflationary pressures in logistics, labor, and raw materials could impact margins [12] Valuation Concerns - Chewy is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 29.98X, which is a premium compared to the industry average of 24.74X, indicating that investors may be paying a high price relative to expected earnings growth [14] Investment Outlook - Chewy's stock rally reflects solid fundamentals and strong customer engagement, but competitive pressures, rising costs, and premium valuation may limit near-term upside [16]

Company Performance - Chewy's stock closed at $38.51, reflecting a decrease of 0.28% from the previous trading session, underperforming compared to the S&P 500's gain of 0.39% [1] - Over the past month, Chewy's stock has increased by 7.97%, which is below the Retail-Wholesale sector's gain of 8.29% but above the S&P 500's gain of 1.7% [1] Upcoming Earnings - Chewy is expected to report an EPS of $0.20, indicating an 11.11% growth compared to the same quarter last year [2] - Revenue is projected to reach $3.2 billion, reflecting a 13.11% increase compared to the year-ago quarter [2] Analyst Estimates - Recent changes to analyst estimates for Chewy suggest a positive outlook, indicating optimism about the company's business and profitability [3] - The Zacks Rank system, which evaluates these estimate changes, provides actionable insights for investors [4] Zacks Rank and Valuation - Chewy currently holds a Zacks Rank of 3 (Hold), with a recent 0.32% decline in the Zacks Consensus EPS estimate [5] - The company has a Forward P/E ratio of 31.15, which is higher than the industry average of 20.55, and a PEG ratio of 0.84, compared to the Internet - Commerce industry's average of 1.1 [6] Industry Context - The Internet - Commerce industry, part of the Retail-Wholesale sector, has a Zacks Industry Rank of 40, placing it in the top 16% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Company Performance - Chewy's stock closed at $38.62, reflecting a +1.26% change from the previous trading day's close, outperforming the S&P 500 which gained 0.72% [1] - Over the last month, Chewy's shares increased by 2.89%, lagging behind the Retail-Wholesale sector's gain of 6.17% but outperforming the S&P 500's gain of 1.02% [1] Earnings Projections - Chewy's upcoming earnings per share (EPS) are projected to be $0.20, indicating an 11.11% increase from the same quarter last year [2] - The consensus estimate for quarterly revenue is $3.2 billion, representing a 13.11% increase from the year-ago period [2] Analyst Estimates - Recent changes to analyst estimates for Chewy reflect positive sentiment regarding the company's business operations and profit generation capabilities [3] - The Zacks Rank system, which incorporates these estimate changes, currently ranks Chewy at 3 (Hold) [5] Valuation Metrics - Chewy has a Forward P/E ratio of 30.76, which is a premium compared to the industry average Forward P/E of 21.67 [6] - The PEG ratio for Chewy is 0.83, while the Internet - Commerce industry average PEG ratio is 1.22 [6] Industry Context - The Internet - Commerce industry, part of the Retail-Wholesale sector, holds a Zacks Industry Rank of 70, placing it in the top 28% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Company Overview - Maev is the first and only human-grade raw dog food brand, founded in 2019 by Katie Spies, an MIT Engineer and dog parent [4] - The brand's mission is to provide easy-to-feed, efficacious daily nutrition for dogs, developed with the assistance of PhD veterinary nutritionists [4] Product Offering - Maev offers a range of premium raw-frozen dog food products, including Beef, Chicken, and Puppy formulas, designed to meet the nutritional needs of dogs [1] - The products are free from additives, fillers, and heat-driven nutrient loss, providing higher protein and nutrient value compared to kibble and home-cooked meals [1] - Maev's formulas are designed to deliver noticeable benefits in 28 days or less [1] Market Position and Growth - The frozen raw dog food market is experiencing remarkable growth, with Maev establishing itself as a leader in this segment [1] - The availability of Maev products on Chewy represents a significant milestone in making premium raw dog food accessible nationwide [2] Vision and Commitment - Maev aims to elevate pet nutrition and empower dog owners to make healthier choices for their pets [2] - The company is committed to improving the lives of dogs through high-quality nutrition [2]

Core Insights - Long-term investing is preferable to market timing, which is often ineffective [1] - Growth stocks can be volatile but offer significant returns if backed by strong businesses [2] Company Analysis: Eli Lilly - Eli Lilly has seen a resurgence in growth due to its GLP-1 drugs, with a 118% increase in annual profitability and a 71% increase in revenue over the past decade [3][4] - The company currently pays an annual dividend of $6 per share, yielding approximately 0.75%, with a payout ratio of about 54% [5] - Eli Lilly's drug portfolio includes successful treatments across various disease areas, with recent approvals for Kisunla, Ebglyss, and Omvoh expected to drive growth [6][7][8] - Preliminary revenue estimates for 2024 indicate a 32% increase compared to 2023, totaling $45 billion, despite a slight downward revision from previous guidance [9] - For the first nine months of 2024, Eli Lilly reported $32 billion in revenue, a 27% increase year-over-year, and net income of approximately $6.2 billion, doubling the previous year's profits [10] - The demand for Eli Lilly's products positions it well for continued growth and profitability [11] Company Analysis: Chewy - Chewy operates a pet e-commerce platform, with its Autoship subscription service accounting for 80% of net sales, totaling $2.3 billion in Q3 2024, a 9% increase from the previous year [12][14] - The majority of Chewy's sales come from non-discretionary purchases, which made up 85% of net sales in Q3 2024 [16] - Chewy is expanding its revenue sources through online pet pharmacy services, telehealth, health insurance, and a new advertising program expected to contribute 1% to 3% of net sales in fiscal 2024 [17] - The company is also opening vet clinics across the U.S., with six already operational, targeting a $25 billion addressable market [18][19] - Despite heavy investments in growth, Chewy generated $4 million in net income in Q3 2024, indicating resilience in its business model [20]

Group 1 - The article provides an update on Chewy Inc. (NYSE: CHWY) following a previous bullish recommendation based on the Investor Day review [1] - The author emphasizes a fundamentals-based approach to value investing, focusing on companies with long-term durability and robust balance sheets [1] - There is a disagreement with the notion that low multiple stocks are inherently cheap, highlighting the importance of valuation in investment decisions [1] Group 2 - The author expresses a belief that in certain situations, the potential for growth can outweigh immediate price concerns [1]

Core Insights - Chewy Inc. has experienced a 6% increase in stock value over the past month, closing at $37.01, which is 5.3% below its 52-week high of $39.10 [1][7] - The stock is currently trading at a forward 12-month P/E multiple of 29.97X, above the industry average of 25.96X, raising questions about the potential for further upside [1][4] - The company is projected to achieve net sales between $11.79 billion and $11.81 billion for fiscal 2024, reflecting an approximate 6% year-over-year growth [10] Financial Performance - Chewy's Autoship program generated $2.3 billion in sales during the third quarter, accounting for 80% of net sales and showing an 8.7% year-over-year increase [11] - The active customer base grew by 160,000 in the third quarter, reaching 20.2 million, with net sales per active customer increasing by 4.2% year-over-year to $567 [14] - The adjusted EBITDA margin expanded to 4.8% in the third quarter, but guidance for the fourth quarter indicates a decline to 3.4% due to higher seasonal marketing costs [18] Market Position and Strategy - Chewy has entered the veterinary services market with Chewy Vet Care, targeting a $25 billion addressable market and operating six veterinary clinics [15] - The company's sponsored ads business is on track to meet its long-term target range of 1-3% of net sales by fiscal 2024, contributing to gross margin improvement [16] - Chewy's expansion into the Canadian market is showing positive results, with improvements in Autoship penetration and net sales growth [16] Challenges and Outlook - Analysts have revised earnings estimates downward, with the Zacks Consensus Estimate for fiscal 2024 now at $1.08 per share, down from previous estimates [21] - The company faces challenges such as slowing growth, potential customer acquisition saturation, and rising cost pressures in a price-sensitive market [17][19] - Elevated advertising and marketing expenses reached $191.8 million in the third quarter, which could strain profitability if revenue growth does not accelerate [20]

Shares of leading pet e-commerce behemoth Chewy (CHWY 5.58%) were up 5% as of 12:45 p.m. ET on Friday, according to data provided by S&P Global Market Intelligence.Following five separate price target increases from analysts in December, Chewy received its first upgrade of the new year from Wolfe Research, which named the stock one of its top picks for 2025.Does Chewy still have room to run?Despite Chewy's stock already doubling from its 2024 lows, Wolfe Research (and I) believe the best is yet to come. The ...

Core Viewpoint - Chewy Inc (NYSE:CHWY) has received an upgrade from Wolfe Research, moving from "peer perform" to "outperform," highlighting potential for revenue and margin growth along with a strong valuation [1] Group 1: Stock Performance - Over the last nine months, Chewy's stock has increased nearly 107%, with a year-over-year gain of 62.2% [2] - The stock is approaching its 12-month high of $39.10, reached on June 27, following a recovery from an early November bear gap [2] Group 2: Analyst Ratings - Despite positive price movements, 11 out of 27 analysts still rate Chewy stock as a "hold," indicating potential for further upgrades [3] - A short squeeze could provide additional upward momentum, as short interest represents 7.4% of the stock's available float, equating to over two days of buying power [3] Group 3: Options Market - Options trading appears to be an affordable strategy, with Chewy's Schaeffer's Volatility Index (SVI) at 46%, ranking in the 4th percentile of its annual range, suggesting lower-than-usual volatility expectations [4]

Ex-hedge fund analyst with a strong interest in finding winners and losers in industries where corporate strategy matters most. I focus on analysing the market structure, competitive positioning and strategic catalysts that lead to money-making ideas in varying time horizons. Enjoy reading the research!Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase ...