Chewy Story

<div class='circular--portrait' style='background:#8B008B;color: #ffffff;font-size:3em;'>CHW</div>
CHWY -- USA Stock  

USD 56.00  1.04  1.89%

Chewy Inc is scheduled to announce its earnings today. The next earnings report is expected on the 14th of December 2020. While some of us are becoming more enthusiastic about consumer cyclical space, let's break down Chewy Inc in greater detail to make a better estimate of its debt utilization. Let's try to inspect if Chewy shares are reasonably priced going into October.
Published over two weeks ago
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Is Chewy (NYSE:CHWY) outlook still optimistic based on the current debt level?
This firm currently holds 244.88 M in liabilities. The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Chewy has an asset utilization ratio of 944.88 percent. This suggests that the company is making $9.45 for each dollar of assets. An increasing asset utilization means that Chewy Inc is more efficient with each dollar of assets it utilizes for everyday operations. The company has Profit Margin (PM) of (5.05) %, which may suggest that it does not properly executes on its current pricing strategies or is unable to control all of the operational costs. This is way below average. Similarly, it shows Operating Margin (OM) of (5.04) %, which suggests for every $100 dollars of sales, it generated a net operating loss of -0.05.
Chewy financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Chewy, including all of Chewy's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Chewy assets, the company is considered highly leveraged. Understanding the composition and structure of overall Chewy debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.

Understanding Chewy Total Debt

Chewy Inc liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Chewy Inc has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Chewy balance sheet include debt obligations and money owed to different Chewy vendors, workers, and loan providers. Below is the chart of Chewy main long-term debt accounts currently reported on its balance sheet.
You can use Chewy Inc financial leverage analysis tool to get a better grip on understanding its financial position

How important is Chewy's Liquidity

Chewy financial leverage refers to using borrowed capital as a funding source to finance Chewy Inc ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Chewy financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Chewy's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions. It is good to see analyst projects for Chewy, but it might be worth checking our own buy vs. sell analysis

Acquisition by Nesbitt Martin H of 1817 shares of Chewy subject to Rule 16b-3

Legal trades by Chewy insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Chewy insider trading alert for grant of class a common stock by Nesbitt Martin H, the corporate stakeholder, on 23rd of September 2020. This event was filed by Chewy Inc with SEC on 2020-09-23. Statement of changes in beneficial ownership - SEC Form 4 [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

Details

The current price rise of Chewy Inc could raise concerns from investors as the firm it trading at a share price of 59.69 on slow start in volume. The company directors and management may have good odds in positioning the firm resources to exploit market volatility in October. The stock standard deviation of daily returns for 30 days investing horizon is currently 3.97. The above-average risk is mostly attributed to market volatility and speculations regarding some of the upcoming earning calls from Chewy partners.

Asset Breakdown

196.4 M
Assets Non Current
559.1 M
Current Assets
Total Assets755.52 Million
Current Assets559.14 Million
Assets Non Current196.38 Million

Our take on Chewy small slide

Current Sortino Ratio is up to 0.08. Price may slide again. Chewy Inc shows above-average downside volatility for the selected time horizon. We advise investors to inspect Chewy Inc further and ensure that all market timing and asset allocation strategies are consistent with the estimation of Chewy future alpha.

Our Conclusion on Chewy

While some other entities within the internet retail industry are still a little expensive, even after the recent corrections, Chewy may offer a potential longer-term growth to investors. With a somewhat neutral outlook on your 30 days horizon, it may be better to hold off any trading activity and neither take up new shares of Chewy nor short your existing holdings in the Stock. It seems the expected volatility has not yet been fully factored into the current price. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Chewy.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Achuva Shats do not own shares of Chewy Inc. Please refer to our Terms of Use for any information regarding our disclosure principles.

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