Chewy (NYSE:CHWY) is up 15% today after the online pet retailer posted a surprise profit that has CHWY stock investors cheering.
Wall Street analysts had expected the company to report another quarterly loss with its first-quarter print. However, Chewy shocked both analysts and investors with a quarterly profit, the first in its 11-year history. That news has CHWY stock trending sharply higher today.
What Happened in CHWY Stock
The Florida-based online pet product retailer reported $2.43 billion in revenue and earnings per share of 4 cents. Analysts had anticipated earnings to fall to a loss of 10 cents and revenue to reach $2.41 billion. The better-than-expected results, which are the second in a row for the company, and the surprise profit are proving to be a catalyst for CHWY stock today.
In a press release, CEO of Chewy Sumit Singh said:
“Fiscal year 2022 is off to a good start as we drove solid 14 percent top-line growth and delivered sequential improvements in gross margin and profitability … Our first quarter results are a testament to the resiliency of the pet category and clearly demonstrate our ability to execute against our strategic priorities.”
Why It Matters
The profitable quarter is boosting investor confidence in Chewy and its prospects in the highly competitive pet retail category. Prior to today, CHWY stock had slumped 59% this year to change hands at $23.49 per share. In February 2021, Chewy’s share price had been as high as $118.
Chewy remains a leading online retailer of pet food, toys and other products. The company’s share of the online market for pet products currently sits at 38%. That’s down from 47% in October 2021, but above its pre-pandemic level of 32% in January 2020.
If Chewy can demonstrate that it is executing on its business strategy and moving into sustained profits, its share price can be expected to continue gaining traction.
What’s Next for CHWY Stock
Chewy shareholders are no doubt happy to see its stock reverse course and finally move higher after a brutal selloff. Long-term, the company will have to continue posting better-than-expected earnings and remain profitable if it hopes to stay in the good graces of investors. But for today, CHWY stock gets some breathing room.
Disclosure: On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.