Chewy (CHWY) has seen its stock price plummet nearly 80% from its all-time high, yet the company has turned profitable and demonstrated consistent revenue growth, making it an attractive buy. In fiscal 2025, Chewy reported $12.6 billion in net sales, reflecting a 6% increase year-over-year, alongside a notable 125% rise in operating income. Despite a skewed net income due to a one-time tax benefit, the company generated $562 million in free cash flow, signaling strong operational control and resilience.
The stock’s current valuation presents an appealing opportunity for investors. While Chewy’s trailing P/E ratio of 50 may seem high compared to the S&P 500 average, its forward P/E ratio drops to just 16, supported by expected net sales growth of 9% and net income growth of 28% in the upcoming fiscal year. As Chewy expands its pet supply and veterinary services, the potential for stock appreciation grows.
Investors should consider adding Chewy shares, as the combination of steady revenue growth and a low forward valuation could lead to significant upside as market sentiment shifts.
Source: fool.com