This is a step-by-step stock review to answer the question, is Chewy (CHWY) stock a good buy?
This article will teach you how to use the 4Ms of investing. This will be a detailed walkthrough to show you how the 4Ms work and why they are important. If you are interested, you can log into Tykr to use the 4M Confidence Booster (Powered by OpenAI) which will allow you to complete a 4M Analysis in less than 60 seconds.
What are the 4Ms?
- MOS (Margin of Safety) – The MOS is the math part of investing which includes the Summary, Score, and MOS (Margin of Safety).
- Meaning – The meaning is the business model and how scalable the revenue streams are.
- Moat – The moat is how the business compares to other companies in the same Sector and Industry.
- Management – The management is the track record of the CEO.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
Table of Contents
The following links will direct you to key topics to help answer the question, is Chewy (CHWY) stock a good buy?
- Chewy Company History
- MOS (Margin of Safety)
- Meaning
- Moat
- Management
- 4M Score
- Is Chewy (CHWY) stock a good buy
1.Chewy Company History
When investing in stocks, it’s important to know the company’s history. This helps us understand the various revenue streams, if they acquired other companies, how they grew through difficult times, and how they separated themselves from the competition.
- Founded: Chewy was established in 2011.
- Founders: Ryan Cohen and Michael Day.
- Headquarters: Based in Dania Beach, Florida, USA.
- Initial Focus: Started as an online retailer of pet food and supplies.
- Growth: Rapidly expanded product offerings to include toys, grooming supplies, and pet medications.
- Customer Service: Known for exceptional 24/7 customer service, creating a loyal customer base.
- Acquisition: Acquired by PetSmart in 2017 for $3.35 billion, one of the largest e-commerce acquisitions at the time.
- Going Public: Chewy went public in 2019, trading on the New York Stock Exchange under the ticker CHWY.
- Product Range: Offers over 2,000 brands and millions of products for pets of all kinds.
- Auto-Ship Program: Popularized auto-ship subscriptions for pet supplies, providing convenience and savings for customers.
- Mission: Committed to providing the best products and services for pet parents and their furry friends.
- Customer Experience: Focuses on a user-friendly website, fast shipping, and hassle-free returns.
- Community Engagement: Supports animal welfare organizations through donations and sponsorships.
- Technology: Invests in technology and logistics to enhance shopping experience and delivery efficiency.
- Employee Focus: Prioritizes a positive work culture and offers competitive benefits to its employees.
2. MOS (Margin of Safety)
When investing in a company, the first step is to look at the financials. Fortunately, Tykr does this for us automatically. The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make.
- Summary: Watch
- Score: 61
- MOS: 1%
To see the most up-to-date Summary, Score, and MOS, please log into Tykr.
3. Meaning
When investing in a company, it’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.
Here is how Chewy (CHWY) makes money:
- Pet Product Sales: Generates revenue from the sale of pet food, toys, treats, grooming supplies, and accessories.
- Prescription Medications: Earns income from the sale of prescription pet medications and veterinary diets.
- Auto-Ship Subscriptions: Encourages recurring purchases through its auto-ship subscription service, providing convenience to customers and stable revenue for the company.
- Veterinary Services: Offers telehealth consultations and veterinary advice, earning fees for these services.
- Chewy Pharmacy: Operates an online pharmacy for pet medications, generating revenue from prescription sales.
- Exclusive Brands: Sells private-label products under brands like American Journey and Frisco, which offer higher margins.
- Healthcare Products: Provides a wide range of healthcare products for pets, including supplements and dental care items.
- Pet Services: Offers additional services such as pet insurance, pet DNA tests, and pet memorials, generating additional revenue streams.
- Subscription Boxes: Sells curated subscription boxes containing toys, treats, and accessories for pets.
- Retail Partnerships: Partners with pet food manufacturers and other brands to sell their products on the Chewy platform, earning commissions.
- Online Advertising: Generates revenue from advertising placements on its website and mobile app.
- International Expansion: Expands revenue streams by entering new international markets and serving pet owners globally.
4. Moat
When investing in a company, it’s important to understand how a company ranks against other companies in the same sector and industry. Based on the Score, here is how Chewy stacks up against other companies.
- Coupang, Inc. (CPNG) – 78
- Vipshop Holdings Limited(VIPS) – 78
- Williams-Sonoma, Inc.(WSM) – 72
- Murphy USA Inc.(MUSA) – 67
- Chewy, Inc. (CHWY) – 61
- Alibaba Group Holding Limited(BABA) – 56
To see the most up-to-date Summary, Score, and MOS on each stock, please log into Tykr.
When investing in a company, it’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.
- Led Chewy’s IPO: Sumit Singh successfully guided Chewy through its initial public offering in 2019, raising over $1 billion.
- Revenue Growth: Tripled Chewy’s revenue to $10 billion over a span of four years.
- Customer Expansion: Increased the number of active customers to over 20 million.
- Innovation: Launched services like “Connect With a Vet,” enhancing customer engagement and care.
- S&P 500 Inclusion: Achieved Chewy’s inclusion in the S&P 500, marking its recognition as a major player in the market.
- Accolades: Named to notable lists such as Bloomberg Businessweek’s “Bloomberg 50” in 2020 and the NRF Foundation’s “People Shaping Retail’s Future 2022”
These achievements highlight Sumit Singh role in driving Chewy growth and strengthening its position in the global fintech market.
6. 4M Score
All of our homework on this company leads up to the 4M Score. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the Meaning, Moat, and Management. If all 4Ms pass, we should have high confidence in buying this stock.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
👉 The 4M Score of Chewy is 60/100.
To see the most up-to-date 4M Score, please log into Tykr.
7. Is Chewy (CHWY) stock a good buy?
Some of the top questions investors can have is Chewy (CHWY) stock a good buy or should I buy Chewy (CHWY) stock?
Chewy presents an enticing investment opportunity driven by its disruptive business model, rapid growth trajectory, and focus on customer satisfaction. As a leading online retailer of pet products, Chewy leverages cutting-edge technology and data analytics to offer a seamless shopping experience for pet owners. Its extensive product selection, competitive pricing, and convenient delivery options cater to the evolving needs of pet parents, fostering strong customer loyalty and repeat business. Chewy’s relentless commitment to customer service, exemplified by personalized recommendations and responsive support, sets it apart in the highly competitive pet care market. Moreover, the burgeoning pet industry, coupled with the ongoing shift towards e-commerce, positions Chewy for sustained expansion and market leadership. With a track record of robust revenue growth and innovative strategies driving future prospects, Chewy represents a compelling investment opportunity for those seeking exposure to the rapidly evolving digital retail landscape.
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To truly know if Chewy is a good stock to buy or sell, we recommend you log into Tykr. Within seconds you can see the Summary, Score, MOS, and 4M Score.
If you found this stock review interesting, you may also like this review on Callaway.