- Wondering if Chewy is finally priced like a long term winner or still stuck in the bargain bin of e commerce stocks? This breakdown will walk you through what the current share price is really implying.
- Chewy’s stock has been choppy, sitting around $32.79 after a 7.3% drop over the last week and a 5.4% slide over the past month, but it is still up 2.9% over the last year despite a rough 3 year and 5 year stretch.
- Recent moves have been driven by shifting sentiment around pet spending, with investors weighing signs of resilient demand for recurring subscription style orders against concerns that consumers are trading down or cutting back on premium pet products. At the same time, the market is reassessing growth expectations as Chewy leans into efficiency, loyalty programs and new services that could change how predictable its cash flows look.
- Right now, Chewy scores a 3/6 on our valuation checks. This suggests it screens as undervalued on half of the metrics we track. Next, we will unpack those methods before finishing with a more complete way to think about what the stock is truly worth.
Approach 1: Chewy Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model estimates what a business is worth by projecting the cash it can generate in the future and discounting those cash flows back to today in dollar terms.
Chewy currently generates about $476.8 Million in free cash flow, and analysts plus Simply Wall St projections expect this to rise steadily over the next decade. For example, free cash flow is projected to reach roughly $570 Million in 2026 and about $1.24 Billion by 2030, with later years extrapolated beyond the formal analyst horizon using a 2 Stage Free Cash Flow to Equity framework.
When all those projected cash flows are discounted back to today, the model produces an intrinsic value of around $57.13 per share. Compared with the recent share price near $32.79, the DCF suggests Chewy trades at roughly a 42.6% discount, indicating that the shares may be undervalued relative to this model-based estimate.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Chewy is undervalued by 42.6%. Track this in your watchlist or portfolio, or discover 912 more undervalued stocks based on cash flows.
Approach 2: Chewy Price vs Earnings
For profitable companies like Chewy, the price to earnings, or PE, ratio is a useful way to gauge how much investors are willing to pay today for each dollar of current earnings. What counts as a fair PE depends on how quickly earnings are expected to grow and how risky those earnings are, with faster growth and lower risk generally justifying a higher multiple.
Chewy currently trades on a PE of about 65.9x, which is well above the Specialty Retail industry average of roughly 20.6x and the broader peer group average of about 24.4x. To put this in context, Simply Wall St calculates a proprietary Fair Ratio of 28.5x for Chewy, which reflects its specific mix of earnings growth prospects, profit margins, risk profile, industry positioning and market cap. This tailored benchmark is more informative than a simple comparison with peers or the industry, because it adjusts for Chewy’s unique fundamentals rather than assuming all retailers deserve the same multiple.
Comparing the Fair Ratio of 28.5x with the current 65.9x suggests the market is pricing in a lot of optimism, and the stock screens as expensive on this basis.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Chewy Narrative
Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple framework on Simply Wall St’s Community page that lets you connect your view of Chewy’s story to a concrete forecast for its revenue, earnings and margins, and then to a Fair Value you can directly compare with today’s Price to help you decide whether to buy, hold or sell. That Fair Value updates dynamically as new data, news and earnings arrive. A more optimistic Chewy Narrative might lean into Chewy+ price increases, expanding vet clinics and ad growth to justify a Fair Value near the high end of community estimates. A more cautious Narrative could focus on slower customer growth, Autoship concentration and margin risk to anchor closer to the low end. This gives you a clear, numbers backed way to see how different perspectives translate into different valuations and action plans.
Do you think there's more to the story for Chewy? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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