Chewy vs. Shopify: Which Consumer Stock Is a Better Buy in 2026?

Pet supplies or digital storefronts? Choosing between Chewy (NYSE:CHWY) and Shopify (NASDAQ:SHOP) depends on whether you prefer a specialized retail powerhouse or a high-growth infrastructure provider for global commerce.

Chewy focuses on capturing the pet parent wallet through a recurring subscription model, while Shopify provides software tools that enable millions of businesses to sell online. Both companies benefit from the long-term shift toward digital spending, though they trade at very different valuations when comparing the P/S ratio of each stock.

The case for Chewy

Chewy serves millions of pet parents through its digital platform. It emphasizes recurring revenue via its Autoship program, which automates regular deliveries for essential pet supplies. In its latest annual report, filed for the period ending February 2025, Chewy noted its expansion through PracticeHub, a platform with approximately 20,000 veterinary practices enrolled, representing close to 50% of all clinics in the U.S.

In FY 2025, revenue reached nearly $12.6 billion, representing growth of roughly 6.2% over the previous year. This steady expansion accompanied a net income of approximately $222.8 million for the same period. The net margin, which shows how much of each dollar of sales remains after all expenses, stood at about 1.8%.

As of its February 2026 balance sheet, Chewy reported a debt-to-equity ratio of 1.1x. This ratio, which compares total debt to shareholder equity, suggests the company uses a moderate amount of borrowing relative to its own capital. The current ratio, measuring the ability to cover short-term bills with liquid assets, is roughly 0.9x. Free cash flow was close to $562.4 million in FY 2025, representing cash from operations minus capital expenditures. Note that stock-based compensation accounted for roughly 43.1% of operating cash flow, inflating reported cash generation, since SBC is a non-cash expense added back to cash flow.

The case for Shopify

Shopify provides the digital foundation for millions of merchants across more than 175 countries to operate their businesses. The merchant base is diverse, with nearly 44% located in the U.S. and significant representation across Europe, Asia, and Canada. This platform supports a wide range of customers, from sole entrepreneurs to large corporations, all of whom use the premium Shopify Plus service.

In FY 2025, Shopify reported revenue of nearly $11.6 billion, representing a year-over-year growth rate of approximately 30.1%. The company produced a net income of roughly $1.2 billion for FY 2025. Its net margin was approximately 10.7%, indicating a higher percentage of revenue converted into profit compared to many other retail stocks.

As of its December 2025 balance sheet, Shopify had a debt-to-equity ratio of 0.0x, indicating it has virtually no debt relative to its equity. The current ratio is quite strong at roughly 6.0x, showing high liquidity to meet short-term obligations. Free cash flow reached nearly $2.0 billion for FY 2025. Note that stock-based compensation accounted for roughly 22.1% of operating cash flow, inflating reported cash generation, since SBC is a non-cash expense added back to cash flow.

Risk profile comparison

Chewy faces intense competition from large-scale online retailers and omnichannel sellers that offer pet supplies. The company relies heavily on third-party providers for logistics and cloud infrastructure, specifically Amazon. Strategic risks also persist as it expands its physical vet clinic footprint and manages legal liabilities related to its pharmacy and telehealth services.

Shopify is highly dependent on the continued growth of small and medium-sized businesses, which can be vulnerable during economic downturns. The company also manages cybersecurity risks associated with storing sensitive buyer data for its millions of merchants. Furthermore, it relies on ecosystem partners such as the payment processor Stripe and Google infrastructure for its multi-tenant software architecture.

Valuation comparison

Shopify trades at a significant premium to Chewy, reflecting its faster revenue growth and stronger net margin, while Chewy offers a much lower price relative to its sales and Forward P/E estimates.

Valuation metrics include those sourced from Financial Modeling Prep (FMP) and may differ from those of other data providers.

Which stock would I buy in 2026?

Considering the current state of both e-commerce companies, I would choose Shopify over Chewy today.

This decision is complicated by the fact that I already own Shopify and have recently called it a hold. However, I bought Shopify earlier in the decade at a significantly lower valuation. At the time, a strategic misstep in logistics sent the stock tumbling. Shopify later corrected this mistake, and the stock rose significantly.

Unfortunately, its valuation has also risen, and I have not bought additional shares recently. Nonetheless, while Chewy is a much cheaper stock, it is also slower growing. Even though it has begun to expand into Canada, I see a much smaller addressable market than I do for Shopify, which appears less limited geographically.

Also, despite Chewy's moves into areas such as brick-and-mortar vet clinics, Shopify seems more successful at expanding its ecosystem. The recent deal with Meta Platforms, in which its AI agent, Muse, can buy products across Shopify's network of merchant stores, appears particularly promising.

In summary, Shopify's forward P/E ratio adds to the risk of buying now. Nonetheless, if I have to choose between it and Chewy, I think it is probably worth paying Shopify’s premium to capitalize on the company's ability to expand its ecosystem.

Will Healy has positions in Shopify. The Motley Fool has positions in and recommends Amazon, Chewy, Meta Platforms, and Shopify. The Motley Fool has a disclosure policy.