Chewy (CHWY): growth potential and loyal customers
Company Overview:
$CHWY+0.1%, a popular e-commerce store for pets, offers a wide range of products, from pet food and toys to health insurance and prescription drugs. The company has built a strong customer base thanks to its loyal fans who return repeatedly and spend more.
Autoship as a growth engine:
- Autoship, an automatic reordering service, accounts for more than 77% of $CHWY'+0.1%s net sales .
- This system ensures regular orders and steady revenue, providing visibility into future sales and stable cash flow.
Expansion and diversification:
-$CHWY+0.1% has expanded its e-commerce platform into Canada, allowing it to enter a new market without significant costs due to its existing infrastructure.
- The company opened its first in-person veterinary clinics, diversifying revenue sources and gaining greater exposure.
Financial outlook and share buyback:
-$CHWY+0.1% recently announced its first-ever share repurchase program, signaling management's optimism about the company's future.
- The company is currently trading at approximately 24 times forward earnings estimates, a bargain price given its recent growth and long-term prospects.
Strong financial results:
-$CHWY+0.1% has become profitable in recent years thanks to growing customer loyalty.
- Autoship contributes significantly to sales and provides stability through regular orders.
Chewy is currently well positioned for future growth due to its stable Autoship service, expansion into new markets, revenue diversification and management's optimistic outlook. The current valuation makes this stock an attractive investment that could see significant growth at any time.
It's an interesting business/focus, but it's not a stock I'd want in my portfolio.
It looks like the company's business is slowly starting to turn around. Backing it up with a share buyback is a great move. The stock could now get to at least 2022 levels.