Amazon vs. Chewy: Growth and Investment Perspectives

A report highlights the contrasting growth trajectories of Amazon and Chewy, focusing on revenue growth, EPS, and market dynamics. With Amazon's strong recovery and Chewy's slowing growth, investors may need to reassess their strategies in the e-commerce sector.

Date: 03-10-2024

AI Rating: 7

Amazon and Chewy represent different investment strategies within the e-commerce landscape. The report indicates that Amazon's net sales have enjoyed a compound annual growth rate (CAGR) of 20% from 2019 to 2023, with analysts predicting a continued revenue increase of 11% from 2023 to 2026 due to expansions and AI impacts on its AWS cloud business. This positive outlook on Amazon's revenue growth could potentially lead to increased stock prices as investor confidence rises.

In terms of Earnings Per Share (EPS), Amazon is expected to see a substantial growth trajectory, with a CAGR of 36%. This growth in EPS, coupled with its large and diversified operations, improves Amazon's attractiveness as an investment, thereby bolstering its stock valuation.

Chewy, while has demonstrated a slightly higher sales growth rate than Amazon at a CAGR of 23%, is experiencing deceleration. Its net sales growth slowed significantly, posting only a 10% increase in fiscal 2023. Analysts project an even slower growth rate of 6% CAGR from 2023 to 2026. This slowing growth could lead to negative sentiment among investors, potentially putting downward pressure on its stock price.

However, Chewy's EPS is projected to grow at a CAGR of 100%, which is a positive sign amidst the slowing revenue growth. This focus on improving profitability could provide some stability to Chewy’s stock despite its current challenges in revenue growth.

In conclusion, while Amazon seems to have a favorable outlook driven by significant growth in sales and EPS, Chewy faces challenges that may affect investor sentiment negatively. Investors closely monitoring these developments may view Amazon as a safer and potentially more profitable investment compared to Chewy as the future unfolds.

Stocks: AMZN CHWY