Chewy (CHWY) Dips More Than Broader Market: What You Should Know

In the latest trading session, Chewy (CHWY) closed at $22.59, marking a -3.99% move from the previous day. The stock fell short of the S&P 500, which registered a loss of 0.06% for the day. Elsewhere, the Dow saw a downswing of 0.11%, while the tech-heavy Nasdaq depreciated by 0.32%.

Coming into today, shares of the online pet store had gained 12.69% in the past month. In that same time, the Retail-Wholesale sector gained 7.55%, while the S&P 500 gained 3.42%.

The investment community will be paying close attention to the earnings performance of Chewy in its upcoming release. In that report, analysts expect Chewy to post earnings of $0.36 per share. This would mark year-over-year growth of 9.09%. Meanwhile, our latest consensus estimate is calling for revenue of $3.32 billion, up 6.83% from the prior-year quarter.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $1.53 per share and revenue of $13.49 billion, indicating changes of +20.47% and +7.2%, respectively, compared to the previous year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Chewy. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Chewy presently features a Zacks Rank of #4 (Sell).

Digging into valuation, Chewy currently has a Forward P/E ratio of 15.4. For comparison, its industry has an average Forward P/E of 18.55, which means Chewy is trading at a discount to the group.

It's also important to note that CHWY currently trades at a PEG ratio of 0.62. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. As of the close of trade yesterday, the Internet - Commerce industry held an average PEG ratio of 1.18.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry, currently bearing a Zacks Industry Rank of 163, finds itself in the bottom 34% echelons of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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