Chewy Inc (CHWY, Financial), a leading e-commerce pet care retailer in the United States, has experienced a notable fluctuation in its stock price recently. Over the past week, the stock has seen a decline of 7.60%, yet it has gained an impressive 15.96% over the last three months. Currently, the GF Value of Chewy stands at $38.24, suggesting a potential value trap at the current price of $26.65, especially when compared to its status as significantly undervalued three months ago.
Overview of Chewy Inc
Founded in 2011 and later acquired by PetSmart in 2017, Chewy went public in 2019. The company has rapidly grown to dominate the online pet care market in the U.S., boasting $11.2 billion in sales in 2023. Chewy offers a comprehensive range of products, including pet food, treats, pharmacy items, and other pet-related goods. Despite its recent market performance, Chewy's business model and expansive product range continue to attract a substantial customer base.
Assessing Chewy's Profitability
Chewy's Profitability Rank is currently at 4/10. The company's Operating Margin stands at 0.59%, which is better than 31.83% of its peers in the industry. Notably, Chewy's Return on Equity (ROE) is an impressive 76.00%, and its Return on Assets (ROA) is 11.89%, ranking better than 96.23% and 89.93% of its competitors, respectively. Additionally, its Return on Invested Capital (ROIC) is 16.76%, surpassing 87.14% of its industry peers. However, it's important to note that Chewy has only been profitable for two out of the past ten years.
Growth Trajectory of Chewy
Chewy's Growth Rank is a robust 7/10. The company has demonstrated significant growth, with a 3-year revenue growth rate per share of 13.70% and a 5-year rate of 23.90%. Looking ahead, Chewy's total revenue growth rate for the next 3 to 5 years is estimated at 5.90%. Furthermore, its 3-year EPS growth rate without NRI stands at a remarkable 97.20%, indicating strong potential for future profitability.
Investor Interest in Chewy
Chewy has attracted attention from notable investors. Baillie Gifford (Trades, Portfolio) holds a 4.44% stake in the company, while Renaissance Technologies (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) hold 0.58% and 0.13%, respectively. These investments reflect confidence in Chewy's business model and growth prospects.
Competitive Landscape
Chewy operates in a competitive online retail market. Its main competitors include Vipshop Holdings Ltd (VIPS, Financial) with a market cap of $7 billion, Etsy Inc (ETSY, Financial) valued at $6.05 billion, and Maplebear Inc (CART, Financial) with a market cap of $9.22 billion. Despite the stiff competition, Chewy's unique focus on pet care and strong market presence give it a competitive edge.
Conclusion: Evaluating Chewy's Market Position
While the current GF Value suggests that Chewy might be a value trap, investors should weigh this against the company's strong profitability metrics and growth prospects. The recent stock performance, coupled with its competitive standing and investor interest, presents a mixed yet intriguing picture. Investors are advised to consider both the risks and opportunities before making investment decisions in Chewy's dynamic market environment.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
