How Will Chewy (CHWY) Perform in Its Maiden Q1 Earnings?
Chewy, Inc. CHWY, which recently got listed on NYSE, is slated to release first-quarter fiscal 2019 results on Jul 18, after market close. The company, which is one of the most trusted online destinations for pet food and other supplies, debuted in the markets on Jun 14. The initial public offering consisted of 46,500,000 shares (Class A common stock) priced at $22 per share. Headquartered in Florida, Chewy is a subsidiary of PetSmart, Inc., and operates solely through its e-commerce channel.
Let’s take a peek at what to expect from the company’s upcoming quarterly announcement.
Factors Hogging the Limelight for Q1
Chewy boasts a strong line up of almost 45,000 products from across 1,600 partner brands. A major chunk of the company’s revenues are generated from pet food sales, while the remaining are sourced from supplies, medicines, vet care, pet services and sale of pets. With a strong brand portfolio in its kitty, Chewy is well positioned for growth in the booming pet industry.
Speaking of the industry particularly, there are ample growth opportunities, as owners spend more for the health and wellness of their pets. Hence, companies are cashing in on this rising pet-love trend by offering high quality and unique products as well as services. In fact, pet ownership rates have increased, which indicates a wider customer base and greater sales opportunities.
Additionally, Chewy is also gaining from its position as one of the largest online platforms in the United States that is dedicated toward pet products. Moreover, its focus on efficient and speedy delivery of items is an upside. Well, these aspects are likely to support the company’s top line in the quarter to be reported.
However, stiff competition in the pet products space is likely to make matters difficult for Chewy. With behemoths like General Mills GIS, Walmart WMT and Amazon AMZN that have firm footing in the market, Chewy needs to traverse extra miles. This is likely to push the company to undertake more spending on product development, innovation and exclusive marketing strategies. Also, cost of financing such development initiatives is likely to be a burden on the bottom line.
The Estimates Picture
The Zacks Consensus Estimate for the first quarter is currently pegged at a loss of 6 cents per share. Further. the Zacks Consensus Estimate for revenues is currently pegged at $1.1 billion.
Zacks Model
Our proven model shows that Chewy is not likely to beat earnings estimates this quarter. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can see the complete list of today’s Zacks #1 Rank stocks here.
Although Chewy carries a Zacks Rank #3, its Earnings ESP of 0.00% makes us less confident about a beat. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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