Chewy vs. MercadoLibre: Which E-Commerce Stock Is a Better Buy in 2026?

Chewy (NYSE:CHWY) and MercadoLibre (NASDAQ:MELI) both sell online, but they serve different customers in different markets. Chewy is a U.S. online pet retailer, and MercadoLibre runs a marketplace and a fintech platform across Latin America.

Chewy's fiscal 2025 ended Feb. 1, 2026, and its latest quarter ended Aug. 2, 2026. MercadoLibre reports in U.S. dollars and uses a calendar year, so its annual figures run through Dec. 31, 2025, and its latest quarter ended June 30, 2026. They sit side by side here as two online retailers with sharply different growth rates and risks.

The case for Chewy

Chewy describes itself as "the preeminent online source for pet products, supplies and prescriptions," and its annual report cites roughly 190,000 products and service offerings from approximately 4,000 brands. Its Autoship subscription program accounted for $2.8 billion, or 84.6% of net sales, in the quarter ended Aug. 2, 2026.

Chewy is also expanding into veterinary care. It had 18 Chewy Vet Care clinics at the end of fiscal 2025. On May 21, 2026, it completed its roughly $400 million purchase of Modern Animal, a veterinary operator that Chewy said had 29 owned clinics when it announced the deal in April 2026. Chewy's annual report also says about 20,000 veterinary practices were enrolled in its PracticeHub e-commerce platform for veterinarians as of Feb. 1, 2026.

In fiscal 2025, revenue reached $12.6 billion, up 6.2% from fiscal 2024. Fiscal 2024 had 53 weeks, and Chewy says its growth was 8.3% on a 52-week basis. Net income was $222.8 million, down from $392.7 million, because fiscal 2024 included a $275.7 million tax benefit from the release of a valuation allowance on deferred tax assets. Operating income rose to $254.3 million from $112.6 million, and net income in fiscal 2023 was $39.6 million.

Chewy had no borrowings under its credit facility as of Feb. 1, 2026. Including $556.8 million in operating lease liabilities ($518.7 million long-term and $38.1 million current), its debt-to-equity ratio was about 1.1x against shareholder equity of $497.9 million.

The current ratio, which compares short-term assets with short-term obligations, was about 0.9x. Chewy reported free cash flow of $562.4 million, calculated by subtracting $129.2 million in capital expenditures from $691.6 million in operating cash flow.

Stock-based compensation of $297.9 million, about 43.1% of operating cash flow, is a non-cash expense that is added back in that figure.

Chewy reported its quarter ended Aug. 2, 2026, on Sept. 9. Net sales rose 7.3% to $3.33 billion, or 5.7% excluding SmartPak, an equine health business it bought on Feb. 2, 2026, and Modern Animal.

Net income was $80.5 million. Chewy raised its full-year outlook and now expects fiscal 2026 net sales of $13.46 billion to $13.57 billion, according to its earnings call.

The case for MercadoLibre

MercadoLibre says its e-commerce platform is present in 18 countries, including Brazil and Mexico, and that its Mercado Pago fintech platform is present in eight. Mercado Pago offers payment accounts and credit, including credit cards.

MercadoLibre reports revenue as "net revenues and financial income." That line grew 39.1% to $28.9 billion in 2025, from $20.8 billion in 2024. Income from operations rose 21.7% to $3.2 billion, but net income rose only 4.5% to $2.0 billion, from $1.9 billion in 2024 and $987 million in 2023. Two things held profit back.

Operating margin fell to 11.1% in 2025 from 12.7% in 2024 as the provision for doubtful accounts rose 66% to $3.1 billion, and sales and marketing expense rose 47%. Below the operating line, income tax expense rose 62% to $845 million, and net foreign currency losses rose to $337 million from $182 million.

As of Dec. 31, 2025, MercadoLibre's debt-to-equity ratio was about 1.7x on the same basis, counting $9.2 billion of loans payable and other financial liabilities and $2.2 billion of operating lease liabilities against $6.7 billion of equity. Its current ratio was about 1.2x, though its current liabilities include $13.0 billion of funds payable to customers.

MercadoLibre does not report free cash flow the way Chewy does. Its own measure, adjusted free cash flow, starts with cash from operating activities and then removes customer funds and loan growth, among other adjustments.

Under that measure, it was $1.48 billion in 2025, compared with $12.1 billion in cash from operating activities, which includes customer funds held through Mercado Pago. The two companies' free cash flow figures are therefore not directly comparable.

In the quarter ended June 30, 2026, net revenues and financial income rose 50% to $10.17 billion, or 43% excluding currency effects. Operating income fell 17% to $683 million, a 6.7% margin, and net income fell 11% to $466 million. In its second-quarter release, management said it continues to "set the dial in a way that prioritizes long-term value creation over short-term profitability."

Risk profile comparison

Chewy says competition in its industry, "especially Internet-based competition, is strong and presents an ongoing threat to the success of our business." With a net margin of 2.4% in its latest quarter, price pressure could weigh on profit.

Chewy also relies on third-party logistics providers, so delivery problems could affect its 21.7 million active customers.

Acquisitions add execution risk. When it announced Modern Animal, Chewy said the deal should be EBITDA-neutral on a pro forma basis in 2026, with clear line of sight to EBITDA contribution beginning in 2027, and accretive to earnings per share within the first year after closing.

Chewy's balance sheet has also changed since year-end. It took out a $600 million seven-year term loan on June 23, 2026, and as of Aug. 2, 2026, it had $588.7 million of long-term debt, net of issuance costs, against $370.5 million of stockholders' equity, while it repurchased $400.0 million of its stock in the first 26 weeks of fiscal 2026.

On its Sept. 9 call, Chewy's CEO said the environment "has broadly stabilized to the trends we observed exiting the first quarter" and that the company is "not assuming a meaningful consumer recovery for the balance of this fiscal year."

MercadoLibre operates in countries where, according to its annual report, inflation and currency devaluations can raise the cost of connectivity and hardware, which can limit its growth. Net foreign currency losses were $337 million in 2025, up from $182 million in 2024.

Credit is a larger risk. MercadoLibre says its lending solution exposes it to the credit risk of its merchants and consumers. Its provision for doubtful accounts rose 66% in 2025, and in the quarter ended June 30, 2026, its credit portfolio grew 75% to more than $16 billion, with 15-to-90-day nonperforming loans at 7%.

The company says new credit card cohorts are "naturally dilutive" and expects credit card margins to strengthen as those cohorts mature. In payments, Mercado Pago competes with banks, fintech companies, payment networks and digital wallets, according to the annual report.

MercadoLibre's borrowing is rising as it expands. Its net debt, which MercadoLibre calculates by counting operating lease liabilities as debt, was $6.4 billion at June 30, 2026, up from $4.7 billion at year-end, and it sold $1 billion of 5.850% notes due 2036 in September 2026.

Valuation comparison

Chewy trades at a lower multiple of both sales and expected earnings than MercadoLibre, whose revenue is growing much faster.

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

The P/S ratio measures the company's market value relative to its sales over the past twelve months, while the Forward P/E relates the stock price to projected earnings estimates for the coming year.

Which stock would I buy in 2026?

While MercadoLibre looks like the better buy to me, I'd be a patient, long-term buyer because the company is sacrificing margin to grow, and its lending book is expanding quickly.

Revenue rose 50% in the second quarter, and operating income fell 17% as management chose long-term value over short-term profit. Management has also said it will keep investing at the scale and pace the opportunity demands, so earnings could stay uneven, and a bad turn in credit or in Latin American currencies would show up fast.

I'm willing to live with that for a business whose buyer and payments user bases each grew by roughly a quarter or more in a year.

Chewy is the steadier business. Autoship supplies more than four-fifths of its sales, and management raised its outlook in September. The catch is that single-digit growth leaves little cushion when margins are this thin. Management is also not assuming a pet-market recovery this fiscal year, and the company added a term loan this summer.

The shares have lost roughly half of their value over the past year, yet I'd want the veterinary acquisitions to deliver the contribution Chewy projects before I lean on it.

Either one could earn a place in a diversified portfolio of 50 or more companies that you plan to hold for at least five years. The Motley Fool's guide to the best e-commerce stocks and how to invest in them covers the industry more broadly.

Mike Schwenk has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chewy and MercadoLibre. The Motley Fool has a disclosure policy.