Chewy, Inc. (CHWY)

High growth, but their last numbers didn't blow the doors off and the market isn't confident about retail stocks because of the US-Iran war. Until the war ends, you can't buy this.

He regrets not calling a sell when shares topped out at $48 last June. CHWY issued a nice beat but also a weak forecast last quarter. They report Wednesday. Hear what they say. A good company, but bad stock.

Today, they reported a modest top and bottom line beat and raised the low end of their full-year forecast. Guidance for this quarter was light. Shares bounced up and down today, ultimately up 1.5%.

They reported a solid quarter with better guidance last week, but shares were hammered 16%. Then, it caught two upgrades and rose, but is still lower than before the quarter. Q2: +8.6% new sales YOY, +0.8% gross margin and $0.33 EPS. Didn't touch their full-year forecast and guidance for the current quarter was strong. They bought back $125 million of shares this quarter. But Wall Street didn't like that their new fulfillment centre needs 6 months to get up to speed. True, their numbers beat, but didn't beat the "whisper number." Still, this doesn't justify the 16% sell off. 

 It reports Wednesday. Their last 2 quarters have been strong.

They reported last week a nice revenue and adjusted EBITDA beat, and raised their full-year forecast. And yet, shares plunged 7%, because shares came into the report hot, up 23% in November. CHWY forecast Q4 margins at 3-3.8%, while the street expected 3.9% and was disappointed. Buy on this dip because of strong numbers: 20.2 million active members, more than expected, and $567.50 spending per active customer, a record high, and pet adoption in the industry growing around 10%, a positive sign. Also, their six vet clinics are bringing in new customers, and they plan to open two more. Also, the clinics are expanding to Canada (Toronto).

It's a comeback story after sliding post-Covid. Shares jumped 27% this week after reporting. They introduced pet care clinics that helps bring down pet care costs. They execute well. Gross margins have expanded. They announced a $500 million buyback and are succeeding in the face of Amazon.

Is astonished these shares have fallen so far, because so many use their products, but the entire pet sector is in the doghouse.

They need to make profits. They don't make money.