Chewy (CHWY) shares surged 13.3% on Wednesday following the company’s optimistic 2026 outlook, despite modest fourth-quarter growth. Revenue for the quarter reached $3.26 billion, in line with estimates and reflecting an 8.1% increase when adjusted for an extra week last year. Notably, Chewy reported improved margins, with gross margin rising to 29.4%, and adjusted EBITDA increasing to $162.3 million. The company also provided a strong revenue forecast of $13.6 billion to $13.75 billion for 2026, surpassing analyst expectations.
The market’s positive reaction stems largely from Chewy’s guidance and its strategic initiatives, including the expansion of its Chewy Vet Care (CVC) business, which has shown promising growth and customer satisfaction. Additionally, the recent acquisition of SmartEquine is expected to enhance Chewy’s revenue streams, albeit minimally in the short term.
Investors should note that while Chewy’s growth may be stabilizing, its current valuation—trading at a price-to-earnings ratio of 21—combined with its expansion efforts, positions it as a compelling buy as it heads into 2026.
Source: fool.com