CHWY - Embedded Expectations Analysis - 2021 07 30
Chewy, Inc. (CHWY:USA) currently trades at a significant premium to UAFRS-based (Uniform) assets, with a 69.9x Uniform P/B. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about their customer lifetime value, EBITDA targets, and out-of-stock headwinds.Specifically, management may have concerns about elevated out-of-stock headwinds and the remaining lifetime value trend for average customers, and they may be overstating the impact of earning their PCAB accreditation for their Compounding Pharmacy business. In addition, they may lack confidence in their ability to maintain new customer additions, sustain positive engagement levels, and make pet health care more affordable. Furthermore, they may lack confidence in their ability to invest in their distribution network, achieve their EBITDA target, and improve customer retention. Finally, they may be overstating the capabilities of their new homepage enhancements and the potential of their Pet Adoption Services.
Chewy is a pure play e-commerce business geared toward pet products for dogs, cats, fish, birds, small pets, horses, and reptiles. The company serves its customers through its retail website, www.chewy.com, and its mobile applications and focuses on delivering exceptional customer service, a large selection of high-quality pet food, treats and supplies, price, convenience (including Chewy's Autoship subscription program), fast shipping, and hassle-free returns.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.