What to Watch With Chewy Stock in 2026

Chewy has solidified customer loyalty through superior service and its Autoship subscription while diversifying into pet insurance, telehealth and pharmaceuticals to broaden revenue streams; these efforts helped drive net sales of more than $9.3 billion in the first nine months of fiscal 2025, up 8% year-over-year. Costs rose more slowly than revenue, but a $216 million 2024 tax benefit inflated prior-period earnings so reported net income fell to $184 million versus $371 million a year earlier, temporarily pushing the trailing P/E to about 100; the forward P/E is roughly 28, slightly below the S&P 500. Analysts model roughly 8% revenue growth by fiscal 2027, and the company’s improving margin and diversification story appears not fully reflected in the stock (up only ~5% year-to-date), supporting the view that a recovery in 2026 is increasingly plausible, though execution and macro risks remain.

Analysis

Chewy has strengthened customer loyalty through superior service and its Autoship subscription while diversifying into pet insurance, telehealth and pharmaceuticals, positioning the business toward more recurring and higher‑value revenue streams. The company competes with larger online retailers such as Amazon but differentiates on service, pricing, supplier relationships and data analytics, which support customer retention and Autoship growth.

In the first nine months of fiscal 2025 (ended Nov. 2) Chewy reported more than $9.3 billion in net sales, an 8% year‑over‑year increase, with costs and expenses rising at a slightly slower pace. A $216 million 2024 income‑tax benefit inflated prior‑period earnings so reported net income fell to $184 million versus $371 million a year earlier, temporarily lifting the trailing P/E near 100; the forward P/E is about 28, modestly below the S&P 500 average of 31.

Analysts model roughly 8% revenue growth by fiscal 2027 and the stock has gained only about 5% year‑to‑date, implying these improvements may not be fully priced and making a 2026 recovery plausible if execution holds. Primary risks to that path are execution on new business lines, the distorting effect of one‑time tax items on comparables, and competitive or macro pressures that could compress multiples or slow demand.

Key Decisions for Investors

• Consider a staged accumulation of CHWY shares given a forward P/E near 28 and an improving revenue trajectory, but limit initial exposure until margin gains are validated
• Require clear evidence of sustained growth from Autoship penetration and non‑retail revenue streams (pet insurance, telehealth, pharmaceuticals) before materially increasing position size
• Monitor quarterly results for normalized net income and exclude one‑time tax effects (the $216 million 2024 benefit) when assessing EPS momentum and valuation re‑rating
• Maintain size discipline or use protective hedges because competition from Amazon and macro uncertainty could delay a 2026 recovery despite operational progress