Chewy's Q3 Earnings Lag Estimates, FY24 Sales View Raised

Chewy, Inc. CHWY posted mixed third-quarter fiscal 2024 results, with the top line surpassing the Zacks Consensus Estimate but the bottom line missing the same. Both the metrics showed year-over-year growth. The company delivered top-line growth that exceeded the high end of its net sales guidance. This was accompanied by a sequential increase in active customers, indicating sustained engagement and growth. The company also reported continued expansion in adjusted EBITDA margins and demonstrated financial strength through robust free cash flow generation.CHWY’s Quarterly Performance: Key Metrics and InsightsChewy posted adjusted earnings of 20 cents per share, which missed the Zacks Consensus Estimate of 23 cents. The figure increased 33.3% from the prior-year period.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Chewy Price, Consensus and EPS Surprise Chewy price-consensus-eps-surprise-chart | Chewy QuoteThe company reported net sales of $2.88 billion, slightly beating the Zacks Consensus Estimate of $2.86 billion and increasing 4.8% from $2.75 million posted in the year-ago period. This growth was fueled by active customer expansion and cross-category product penetration, leading to continued gains in customer wallet share.Sales from Consumables grew 2.9% year over year to $2.04 billion, which beat the consensus estimate of $2.02 billion. Hardgoods increased 4% to $296.5 million, surpassing the consensus estimate of $289 million. Other sales rose 13% year over year to $537.9 million, in line with the consensus estimate.Chewy’s gross profit increased 7.9% year over year to $843.9 million. The gross margin expanded 80 basis points (bps) to 29.3% compared with 28.5% in the third quarter of fiscal 2023. This increase was mainly driven by supply-chain efficiency gains across the company’s network, along with margin expansion in the consumables, healthcare and private brands businesses.SG&A expenses rose 2.3% year over year to $626.5 million in the quarter. As a percentage of net sales, SG&A expenses decreased 50 bps year over year to 21.8%.Adjusted EBITDA was $138.2 million, an increase from $82.6 million reported in the year-ago quarter. The adjusted EBITDA margin increased 180 bps year over year to 4.8%. This improvement was driven by better gross margin performance, a disciplined approach to cost management and the ongoing benefits of fixed cost leverage.CHWY’s Financial Health SnapshotChewy exited the quarter with cash and cash equivalents and marketable securities of $508 million, It remained debt-free with an overall liquidity position of approximately $1.3 billion and total shareholders’ equity of $223.4 million. Net cash used in operating activities for the nine months ended Oct. 27, 2024 was $388.8 million.CHWY reported a free cash flow of $151.8 million for the fiscal third quarter, highlighting the company’s ability to generate increasing levels of free cash flow while continuing to invest in growth initiatives and return significant capital to its shareholders.What to Expect From CHWY in the FutureFor fourth-quarter fiscal 2024, management expects net sales in the range of $3.18-$3.20 billion, indicating approximate growth of 13%.Management has revised fiscal 2024 net sales guidance to the range of $11.79-$11.81 billion, implying 6% year-over-year growth. This revised outlook is an upgrade from the previous guidance of $11.6-$11.8 billion, which indicated  4-6% growth.The company raised its expectation for adjusted EBITDA margin to 4.6-4.8%, up from the previous guidance of 4.5-4.7%. This Zacks Rank #2 (Buy) stock has risen 27.8% in the past three months compared with the industry’s growth of 23.4%.Image Source: Zacks Investment ResearchOther Stocks to ConsiderBark, Inc. BARK, a dog-centric company, provides products, services and content for dogs. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The consensus estimate for Bark’s current fiscal-year sales and earnings indicates growth of 2% and 81.8%, respectively, from the prior-year reported levels. BARK delivered a trailing four-quarter average earnings surprise of 16.7%.Freshpet, Inc. FRPT, together with its subsidiaries, manufactures, distributes and markets natural fresh meals and treats for dogs and cats. It currently has a Zacks Rank #2. FRPT delivered a trailing four-quarter average earnings surprise of 144.5%. The Zacks Consensus Estimate for Freshpet’s current fiscal-year sales and EPS indicates growth of 27.3% and 224.3%, respectively, from the prior-year levels.US Foods Holding Corp. USFD engages in marketing, sale and distribution of fresh, frozen and dry food and non-food products to foodservice customers in the United States. It currently carries a Zacks Rank #2. USFD delivered an earnings surprise of 3.7% in the last reported quarter.The Zacks Consensus Estimate for US Foods Holding’s current fiscal-year sales and earnings indicates growth of 6.4% and 18.6%, respectively, from the prior-year reported levels.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Freshpet, Inc. (FRPT): Free Stock Analysis Report US Foods Holding Corp. (USFD): Free Stock Analysis Report Chewy (CHWY): Free Stock Analysis Report BARK Inc. (BARK): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks