Chewy (CHWY) stock is soaring in Wednesday's session after the online pet products retailer blew past earnings expectations for its second quarter.
In the 13 weeks ended July 28, Chewy said its earnings per share (EPS) jumped to 24 cents from 9 cents in the year-ago period. Revenue was up 2.6% year-over-year to $2.86 billion, helped by a 5.8% jump in Autoship customer sales to $2.24 billion.
"Our Q2 performance reflects another quarter of strong execution, delivering net sales at the high end of our guidance range," said Chewy CEO Sumit Singh in a statement. "Chewy's compelling value proposition is driving broader and deeper customer engagement, as reflected by our 20 million active customers, which grew sequentially in the quarter, and net sales per active customer of $565, which reached a new record for the company."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results were mixed compared to analysts' expectations. While Chewy's top line matched what Wall Street was anticipating, it blew past estimates for earnings of 1 cent per share, according to Yahoo Finance.
For the third quarter, Chewy said it anticipates revenue in the range of $2.84 billion to $2.86 billion, representing a year-over-year increase of approximately 2% to 3%. Analysts are forecasting revenue of $2.86 billion.
Chewy also reiterated its revenue forecast for the full fiscal year, anticipating sales of $11.6 billion to $11.8 billion. It also raised its adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin outlook to 4.5% to 4.7% from 4.1% to 4.3%.
Is Chewy stock a buy, sell or hold?
Thanks to today's post-earnings pop, Chewy is now up more than 22% for the year to date, outpacing the S&P 500's 17% return.
Wall Street is bullish on the consumer discretionary stock, but analysts' price targets have failed to keep up with its recent rally. According to S&P Global Market Intelligence, the consensus analyst target price for CHWY stock is $27.73, representing a discount to current levels. Analysts may very well revise their price targets following the better-than-expected earnings results.
Meanwhile, the consensus recommendation is Buy. Speaking for the bulls is financial services firm William Blair, which has an Outperform rating (equivalent to a Buy) on CHWY stock.
"We still see a compelling and improving fundamental outlook for Chewy, with a stabilizing pet market and a spring-loaded model set to deliver outsized free cash flow in the coming years," said William Blair analyst Dylan Carden in an August 26 note. "Management has cited several reasons to believe that pet spending improves in the second half, namely an improving inflationary backdrop, though we believe comparisons alone could be the largest driver."
Related Content
-
The Y Rule of Retirement: Why Men Need to Plan DifferentlyIf you have a Y chromosome (because you're a guy), following the 'Y rule of retirement' can help you transition to this new life stage with grace.
-
Retire on This Island for Mediterranean Living on the CheapThis independent nation has a lower cost of living and more visa options than many of its Mediterranean cousins.
-
5 Popular Investing Strategies You Should Really RethinkThere are plenty of popular sayings that help guide your investing strategies, but which ones work? We turned to the experts and historical data to find out.
-
I'm a Financial Professional: It's Time to Stop Planning Your Retirement Like It's 1995Today's retirement isn't the same as in your parents' day. You need to be prepared for a much longer time frame and make a plan with purpose in mind.
-
An Attorney's Guide to Your Evolving Estate Plan: Set-It-and-Forget-It Won't WorkWhen did you last review your will? Before kids? Before a big move? An update is essential, but regular reviews are even better. Here's why.
-
Nasdaq Ends the Week at a New High: Stock Market TodayThe S&P 500 came within a hair of a new high, while the Dow Jones Industrial Average still has yet to hit a fresh peak in 2025.
-
For a Richer Retirement, Follow These Five Golden RulesThese Golden Rules of Retirement Planning, developed by a financial pro with many years of experience, can help you build a plan that delivers increased income and liquid savings while also reducing risk.
-
Time for a Money Checkup: An Expert Guide to Realigning Your Financial GPSEven if your financial plan is on autopilot, now is the perfect time to make sure it's still aligned with your goals, especially if retirement is on the horizon.
-
Stocks Swing Lower as Eli Lilly, Fortinet Spiral: Stock Market TodayThe main indexes finished well off their session highs after a disappointing batch of corporate earnings reports.
-
Are You Leaving Money on the Table? Four Strategies to Free Up Stuck InvestmentsFrom forgotten 401(k)s to outdated asset allocations, here’s how stuck money can hurt your retirement.
