Hot Stock to watch: Chewy Inc (NYSE: CHWY)

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Chewy Inc (NYSE: CHWY) stock rose over 1.9% on 10th December, 2019 (as of 11:04 am GMT-5 ; Source: Google finance). . For the third quarter, active customers have increased by 33% year-over-year to 12.72 million and net sales per active customer has increased by 11.4% to $360. Autoship customer sales rose 49% to $865.2 million, due to growth in the Autoship customer base. Autoship customer sales, as a percentage of net sales, has increased to 70.4% compared to 66.2% last year. Gross margin have expanded 410 basis points to 23.7%, due to the disciplined execution to improve product margin and supply chain efficiency gains across all business verticals, including the margin improvements in pharmacy and private brands. Third quarter net cash provided by operating activities has fallen to $1.6 million, compared to net cash used of $43.2 million in the third quarter of 2018. Free cash flow was ($12.8) million for the third quarter of 2019 compared to ($51.3) million in the third quarter of 2018

Further, the company continued to see growth in the customer base along with the increased spending among its customers. The results reflects the continued top-line growth at scale emphasizing strength in the underlying business. The sales and margins grew due to  the recent investments in both private brands and Chewy Pharmacy, which remained the two pillars of its growth and margin strategy.

CHWY in the third quarter of FY 19 has reported the adjusted loss before interest, tax, depreciation and amortization of $30.2 million, missing the analysts’ estimates for the adjusted loss before interest, tax, depreciation and amortization of $31.4 million, according to analysts surveyed by FactSet. The adjusted EBITDA margin of (2.5) percent has improved 530 basis points year-over-year. The company had reported the adjusted revenue growth of 40.4 percent to $1.23 billion in the third quarter of FY 19, beating the analysts’ estimates for revenue of $1.2 billion. The company has posted net loss of $0.20 per share compared to analysts’ expectation of a loss of $0.16 per share.

Chewy expects revenue t be in the range of $1.33 billion to $1.35 billion for the fourth quarter, and range of $4.82 billion to $4.84 billion for the year. The analysts had forecast on revenue of $1.32 billion for the fourth quarter, and $4.8 billion for the year.

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