Buy Chewy Stock Now? Key Tips to Note Ahead of Q3 Earnings

Core Viewpoint - Chewy Inc. is preparing to announce its Q3 fiscal 2024 earnings, with a focus on its growth trajectory and strategic initiatives, raising questions about its investment viability at this stage [1] Financial Performance - The Zacks Consensus Estimate projects revenues of $2.86 billion for the upcoming quarter, indicating a 4.5% increase year-over-year [2] - The consensus estimate for earnings is 23 cents per share, reflecting a significant 53.3% year-over-year increase, with Chewy having an average earnings surprise of 50.9% over the past four quarters [3] Market Position and Strategy - Chewy is adapting to market dynamics, enhancing its position in the growing pet care sector through an expanding customer base and diversified service offerings, including veterinary clinics and pharmacy services [6] - The company is broadening its inventory to meet customer preferences, supported by strategic promotions and targeted marketing initiatives [7] - The success of the Autoship program is expected to drive revenues and improve customer retention, simplifying the purchasing process and maintaining a steady revenue stream [8] Expansion and Innovation - Chewy has opened two additional Vet Care clinics, increasing the total to six, which enhances customer loyalty and serves as entry points for new customers [9] - The Sponsored Ads program is contributing to revenue growth, with increasing advertiser demand and improved click-through rates, while enhancements to the mobile app are driving customer acquisition and order frequency [10] Stock Performance - Chewy's stock has surged 50.1% over the past six months, outperforming the industry growth of 19.4% and its close competitors [11] Valuation - Chewy shares are trading at a forward 12-month price-to-sales ratio of 1.14, below the five-year median of 1.63 and the industry's average of 1.80, presenting an attractive opportunity for investors [13] Investment Thesis - Chewy's stock price appreciation, strong financial metrics, and strategic initiatives underscore its growth potential, with a focus on innovation through the Autoship program and pharmacy services likely driving revenue growth [16] - The company's diversified services and strategic marketing initiatives align with evolving consumer preferences, enhancing customer engagement and revenue potential [17]