The last three months have been tough on Chewy, Inc. (NYSE:CHWY) shareholders, who have seen the share price decline a rather worrying 34%. But that doesn't change the fact that the returns over the last year have been pleasing. After all, the share price is up a market-beating 80% in that time.
Chewy wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Chewy grew its revenue by 48% last year. That's a head and shoulders above most loss-making companies. While the share price gain of 80% over twelve months is pretty tasty, you might argue it doesn't fully reflect the strong revenue growth. So quite frankly it could be a good time to investigate Chewy in some detail. Human beings have trouble conceptualizing (and valuing) exponential growth. Is that what we're seeing here?
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Chewy is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So it makes a lot of sense to check out what analysts think Chewy will earn in the future (free analyst consensus estimates)
A Different Perspective
Chewy boasts a total shareholder return of 80% for the last year. Unfortunately the share price is down 34% over the last quarter. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 3 warning signs for Chewy (1 is a bit unpleasant!) that you should be aware of before investing here.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.