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Chewy (CHWY) Lined Up for Q4 Earnings: What's in the Cards?

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Chewy, Inc. (CHWY - Free Report) is expected to report top-line growth when it reports fourth-quarter fiscal 2021 results on Mar 29, after the market closes. The Zacks Consensus Estimate for quarterly sales stands at $2,431 million, indicating an increase of 18.7% from the last fiscal-year quarter’s reported figure.

However, Chewy’s bottom line is expected to decline from the last fiscal-year quarter’s reported figure. The Zacks Consensus Estimate for loss in the fiscal fourth quarter has been stable over the past 30 days at 7 cents a share. However, CHWY reported earnings of 11 cents a share in the earlier fiscal year’s quarter.

For fiscal 2021, the consensus estimate for sales is pinned at $8.93 billion, implying an increase of about 25% from the last fiscal year’s reported figure. The Zacks Consensus Estimate for the same fiscal year’s loss stands at 8 cents a share. However, Chewy delivered earnings of 9 cents in fiscal 2020.

This pet food and other pet-related supplier delivered an earnings surprise of 253.1%, on average, in the trailing four quarters. In the last reported quarter, Chewy recorded an earnings surprise of 40%.

Key Factors to Note

Chewy’s sales performance for the fiscal fourth quarter is most likely to have been benefited by its e-commerce channels, product assortments and innovative services. To drive online sales, management has been making technology upgrades for its website and online platforms for sometime now. Higher product demand, robust consumer engagement and growth in the active customers are steadily contributing to results. Boosting customer base and enhancing their wallet share are key components of CHWY’s growth strategy. Additionally, CHWY’s pharmacy business bodes well.

On Chewy’s last earnings call, management had projected net sales for the fiscal fourth quarter to be $2.40-$2.44 billion, indicating growth of 17-19% from the prior fiscal-year quarter’s tally. For fiscal 2021, net sales are likely to fall in the band of $8.90-$8.94 billion, suggesting an increase of 25% from the last fiscal year’s level.

On the flip side, the global supply-chain disruptions, elevated inbound freight costs and product cost inflation remain major deterrents. These factors have been weighing on Chewy’s gross margin for a while now. Inflationary pressures, product shortages and labor constraints are hurting CHWY’s performance. In addition, higher operating expenses, including SG&A and significant labor cost pressures, are concerns. All these headwinds might have dampened the bottom-line performance in the quarter under review.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Chewy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here as explained below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Chewy Price and EPS Surprise

Chewy Price and EPS Surprise

Chewy price-eps-surprise | Chewy Quote

Chewy has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of 0.00%, making surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies worth considering as our model shows that these have the right combination of elements to beat on earnings:

Hormel Foods (HRL - Free Report) currently has an Earnings ESP of +0.43% and a Zacks Rank #2. HRL is expected to register top and bottom-line growth when it reports first-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for HRL’s quarterly revenues is pegged at $2,964 million, suggesting growth of 13.4% from the prior fiscal-year quarter’s level. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Hormel Foods’ quarterly earnings is pegged at 47 cents per share, suggesting a rise of 11.9% from the last fiscal year quarter’s reported number. HRL delivered an earnings beat of 1.7%, on average, in the trailing four quarters.

Dollar Tree (DLTR - Free Report) currently has an Earnings ESP of +2.32% and a Zacks Rank #3. DLTR is likely to register a bottom-line increase when it reports first-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $1.95 suggests a rise of 21.9% from the last fiscal-year quarter’s reported figure.

Dollar Tree’s top line is expected to rise from the year-ago fiscal quarter’s reported number. The Zacks Consensus Estimate for quarterly revenues is pegged at $6,742 million, indicating an improvement of 4.1% from the figure reported in the prior fiscal year’s quarter. DLTR has a trailing four-quarter earnings surprise of 11.8%, on average.

Campbell Soup (CPB - Free Report) currently has an Earnings ESP of +0.06% and a Zacks Rank of 3. CPB is expected to register top and bottom-line growth when it reports fourth-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for CPB’s quarterly revenues is pegged at $2,031 million, suggesting growth of 2.4% from the prior fiscal-year quarter’s reading.

The Zacks Consensus Estimate for Campbell Soup’s quarterly earnings is pegged at 61 cents per share, suggesting a 7% increase from the earlier fiscal-year period’s reported number. CPB delivered an earnings beat of 3.7%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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