Chewy Surges on Earnings Beat but Investors Take Profits Into Close

"We were watching yesterday whether Chewy could sustain its profitability momentum after a string of strong quarters. The answer came pre-market on December 10: the company beat earnings estimates by 39%, posting $0.32 per share against the $0.23 consensus. The stock surged to $37.34 at the open but gave back most gains through the session, closing at $35.22. This morning, shares are up 1.5% in pre-market trading to $35.37, suggesting investors are still digesting the implications."

"Chewy's Q3 results delivered on multiple fronts. Revenue of $3.12 billion beat estimates by $24 million and grew 8.3% year over year. But the real story was profitability: net income hit $59.2 million, up from just $3.9 million in the same quarter last year. That represents a 1,415% increase in bottom-line performance. The company's gross margin expanded 50 basis points to 29.8%, and adjusted EBITDA climbed 30.9% to $180.9 million. Free cash flow generation remained strong at $330.4 million for the nine-month period."

"What matters most for valuation: the forward P/E ratio of 25.8x looks dramatically cheaper than the trailing 72.2x multiple, reflecting expectations that earnings will continue accelerating. Yesterday's beat confirms the market wasn't overoptimistic. Management Confidence Meets Measured Reaction CEO Sumit Singh emphasized that "Chewy continues to outperform the pet category and expand market share, with profits once again growing faster than sales." He highlighted the company's "structural resilience" and "execution quality," pointing to sustainable advantages in a competitive market."

Chewy reported Q3 EPS of $0.32, beating estimates by 39%, and revenue of $3.12 billion, up 8.3% year over year. Net income rose to $59.2 million from $3.9 million a year earlier, a 1,415% increase. Gross margin expanded 50 basis points to 29.8% and adjusted EBITDA increased 30.9% to $180.9 million. Nine-month free cash flow totaled $330.4 million. This marks the fourth consecutive profitable quarter, with quarterly net income between $59 million and $62 million. The forward P/E of 25.8x is far lower than the trailing 72.2x. Management cited market-share gains, structural resilience, and execution quality. The stock initially jumped, then retraced as investors took profits, with modest pre-market gains afterward.

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