Chewy Stock Is Quietly Becoming a Buy Again. Here's Why.

Investors can likely be forgiven for forgetting about Chewy (NYSE: CHWY) stock. The pet-oriented e-commerce company soared during the pandemic. However, its stock price collapsed beginning in early 2021, and it has traded in a range for the last four years.

After that trading pattern, it may surprise investors that it looks increasingly like a value stock. That could indicate it has finally become a buy again, and here's why.

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The state of Chewy

Chewy successfully competed with companies like Amazon by becoming more than a transactional company. Chewy stood out with superior customer service and competitive pricing, endearing pet owners to the company.

This led to the spike in the stock price during the pandemic as more consumers shopped online. As previously mentioned, the stock plunged in 2021, and that drop seemed to diminish confidence in Chewy stock.

In contrast, the company itself stayed in a growth mode over the last four years. Many of those revenue gains came from taking a page from other e-commerce companies and starting new lines of business. Consequently, Chewy now offers veterinary telehealth services and pharmaceuticals for pets.

Those additional business lines boosted its financials. In the first nine months of fiscal 2025 (ended Nov. 2), revenue of $9.3 billion rose by 8% from year-ago levels. Net income fell during the period on account of a $216 million income tax benefit it received in 2024.

Nonetheless, investors should note that the company earned $212 million in operating income in the first three quarters of fiscal 2025, 74% more than the $122 million earned during the same timeframe in fiscal 2024.

Additionally, the rising revenue trend is on track to continue. Analysts forecast 6% revenue growth this fiscal year and 8% in fiscal 2027. That is going to place further downward pressure on the valuation metrics if the stock stays in a range.

Investors should note that the company only came into profitability in 2022, leaving it without a P/E ratio during the pandemic. However, the price-to-sales (P/S) ratio, which approached 7 at the stock's 2021 peak, has now fallen to 0.9.

Also, while its P/E ratio of 55 may appear elevated, the fact that its forward P/E ratio is 17 may make the stock appear cheap. Thus, given the company's continued financial improvements, its valuation could become the catalyst Chewy stock needs to break out of its trading range.

Consider Chewy stock

After a massive decline and years of stagnation, Chewy stock may finally be ready for its comeback.

Admittedly, the buying frenzy during the pandemic likely overvalued Chewy stock for a time. Nonetheless, Chewy has delivered steady financial improvements as a company. With the stock trading in a range for the last four years, the stock has become inexpensive.

That improvement arguably makes now a great time to buy Chewy stock, and investors should probably start buying before more investors notice the continued growth and low valuation.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Chewy. The Motley Fool has a disclosure policy.