Chewy ($CHWY) Q2 Results: A Mixed Bag with Promising PotentialChewy Inc. (NYSE: NYSE:CHWY ), the well-known e-commerce pet food and supplies retailer, reported its Q2 FY2024 results in line with expectations, showcasing a mix of stable revenue growth and improved profitability metrics. The company, founded by Ryan Cohen (known for his involvement in GameStop), continues to hold its ground in the e-commerce sector, benefiting from strong consumer demand and shifting shopping habits.
Fundamental Highlights
Chewy's Q2 CY2024 earnings reflect moderate revenue growth and better-than-expected profitability:
Revenue: Chewy's revenue rose 2.6% year-over-year to $2.86 billion, slightly surpassing analyst estimates of $2.86 billion. Though this is a modest increase, it aligns with market expectations and highlights the company's ability to maintain stable growth amid economic uncertainties.
Non-GAAP earnings per share came in at $0.24, beating analysts' projections of $0.21 by 14.1%. This demonstrates Chewy’s ability to enhance profitability, driven by improved operational efficiencies and cost management.
The gross margin expanded to 29.5% from 28.5% in the same quarter last year, indicating better cost controls and pricing strategies. While the EBITDA margin improved significantly to 5.1%, up from 3.2% a year ago, reflecting a strong bottom-line performance.
Free cash flow margin also rose to 3.2%, compared to 1.8% in the previous quarter, signaling better cash management and liquidity.
Strategic Positioning and Market Dynamics
Chewy (NYSE: NYSE:CHWY ) remains a trusted destination for pet owners, with a compelling value proposition that continues to drive customer engagement. The company boasts 20 million active customers and a record net sales per active customer of $565. As e-commerce adoption remains robust, Chewy is strategically positioned to capture future growth, although its recent growth rates have been modest compared to its previous trajectory.
With the global e-commerce market still expanding, especially post-COVID, Chewy's investments in its logistics infrastructure and product portfolio should support its growth ambitions. However, the company's revenue growth, which averaged 12% over the last three years, was only 2.6% this quarter — highlighting the challenge of maintaining high growth in a more mature market.
Technical Outlook
From a technical perspective, Chewy’s stock ( NYSE:CHWY ) is showing bullish signs:
Moving Averages: The stock is currently trading above its 50, 100, and 200-day moving averages, which suggests a bullish trend. This is typically seen as a positive indicator by technical analysts, indicating upward momentum. The RSI is currently at 64.34, approaching the overbought territory of 70. This suggests that while there is still room for upward movement, traders should exercise caution as the stock nears potentially overbought conditions.
Chewy (NYSE: NYSE:CHWY ) has rebounded from a recent low and is moving toward a pivot point of $31.47. Investors might watch for a potential pullback or consolidation at this level before a possible new upward move.
Conclusion: A Balanced Perspective
Chewy's Q2 results reflect a stable performance with room for growth. The company’s improved margins and profitability highlight its operational strengths, while its technical indicators suggest potential bullish momentum. However, with its revenue growth tapering, Chewy will need to find new ways to reignite its expansion. As consumer preferences continue shifting online and pet ownership remains strong, Chewy is well-positioned for future gains — but cautious optimism remains the key.
Chwystock
$CHWY chewing its way up to $43.76 on the weekly and higher RSICHWY 200 day moving average is way above the price of $25. It will probably go to the $43-$44 dollar range.
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NYSE:CHWY
Chewy Stock Surges 25.37% on First Quarter 2024 Financial ResultChewy stock ( NYSE:CHWY ) surged 25.37% on the first quarter 2024 financial result, following a strong Q1 2024 earnings report that beat Wall Street estimates and an increase in Autoship sales. The company reported adjusted earnings of 31 cents a share on revenue of $2.88 billion for the quarter ended April 28, beating analysts' expectations of 20 cents a share on revenue of $2.85 billion. In the same period last year, the company posted earnings of 20 cents a share on revenue of $2.79 billion.
Chewy ( NYSE:CHWY ), a pet supplies website, is known for its Autoship offering, which allows users to have items scheduled to automatically be delivered at their home for a discount. During the quarter, Chewy reported a 6.4% increase in Autoship customer sales from a year ago to $2.23 billion.
The pandemic-driven surge in pet adoptions during the height of Covid-19 saw a jump in demand, but adoptions have slowed and rising prices have seen Chewy ( NYSE:CHWY ) take a hit. The company's financial results for the first quarter of fiscal year 2024 ended April 28, 2024, showed strong net sales and record-breaking Adjusted EBITDA.
Technical Outlook
Chewy stock ( NYSE:CHWY ) stock is up 26% as of the time of writing prior to the earnings beat. The stock's Relative Strength Index (RSI) of 74.51 signifies the stock is currently overbought.
CHWY Chewy Options Ahead Of EarningsIf you haven`t bought the all time low:
Then you should know that looking at the CHWY Chewy options chain ahead of earnings , i would buy the $43.5 strike price Puts with
2022-12-9 expiration date for about
$2.46 premium.
If the options turn out to be profitable Before the earnings release, i would sell at least 50%.
Looking forward to read your opinion about it.
CHWY bullish options ahead of earningsYesterday Chewy, Inc. (CHWY) had a strange amount of options, 1.2K Puts and 10.2K Calls, many of them expiring soon,
2022-3-18, with a strike price of $70.
2 Week Range 36.69 - 97.74
yesterday the price was $42.04
On 1/27/2022 Royal Bank of Canada Initiated Coverage for Chewy, Inc. (CHWY) with an Outperform rating and a price target of $77.00.
I aim for the 52.60 resistance short term.
Looking forward to read your opinion about it.