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 Trump GOP Tax Bill Could Worsen California Cost of LivingState Tax Energy bills in the Golden State may shock you if Republican lawmakers in Congress remove certain energy tax credits through Trump's 'big, beautiful bill.'
-
The Best Covered-Call ETFs to BuyCovered-call ETFs can provide consistent, above-average income generation, but they can also cap potential upside. Here's what to look for.
-
The Best Covered-Call ETFs to Buy
Covered-call ETFs can provide consistent, above-average income generation, but they can also cap potential upside. Here's what to look for.
-
Wealth Advisers: In Estate Planning, the End Is Just the BeginningWe need to keep the lines of communication with our clients open so that we can anticipate and help them navigate issues that arise over time.
-
Stood Up by a Radio Show: But Was It a Breach of Contract?A conscientious financial planner reschedules his clients after being invited onto a talk show and ends up losing one of them at a cost of $5,000. What does the radio show owe him, if anything?
-
Stock Market Today: Stocks Stable as Inflation, Tariff Fears EbbConstructive trade war talks and improving consumer expectations are a healthy combination for financial markets.
-
Eight Estate Planning Steps to Protect Your Loved Ones (and Your Legacy)Two-thirds of Americans don't have an estate plan. If you're one of them, these are the essential steps to take now to prevent problems for your family later.
-
The Six Pros This Adviser Says You Need to Sell Your BusinessSelling your business isn't as simple as getting the best price and walking away. These are the six professionals you'll need to get a deal across the finish line.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build WealthConsistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
A Financial Adviser's Guide to Solving Your Retirement Puzzle: Five Key PiecesIf retirement's a puzzle you're struggling with, try answering these five questions. The answers will guide you toward a solution.
