Chewy (NYSE: $CHWY) soared higher on March 25 after its fiscal fourth-quarter report, with the market looking past a slightly softer headline EPS. It reported stronger profitability, rising customer metrics, and a 2026 outlook that points to another year of healthy growth and margin expansion. The stock was trading at about $26.35 in afternoon action, up roughly 12.4% on the day, after hitting an intraday high of $27.32 and pushing Chewy’s market value to about $14.0 billion.
Q4 Results Put Margins in Focus
For the fiscal fourth quarter ended February 1, 2026, Chewy posted net sales of $3.26 billion. Adjusted EPS came in at $0.27, while adjusted EBITDA reached $162.3 million, good for a 5.0% adjusted EBITDA margin. Gross margin expanded to 29.4%, operating margin improved to 1.3% from negative 0.3% a year earlier, and free cash flow hit $232 million. That combination helped offset concerns around the slower top-line headline and showed that Chewy’s margin story is still moving in the right direction.
Chewy ended the year with 21.3 million active customers, up about 4% year over year, while Autoship sales reached more than $2.7 billion in the quarter and represented 84% of net sales. Net sales per active customer climbed to $591. Those numbers point to a business that is still deepening engagement with its core customer base while leaning on its recurring revenue engine.
Full-Year 2025 Showed Real Operating Progress
Chewy delivered fiscal 2025 net sales of $12.60 billion, adjusted EBITDA of $719.2 million, and record free cash flow of $562.4 million. Adjusted EBITDA margin expanded to 5.7%, while the company finished the year with roughly $879 million in cash equivalents and marketable securities, remained debt-free, and said total liquidity stood at about $1.7 billion. Chewy also repurchased roughly 6.8 million shares in 2025 for about $257 million, signaling confidence in both the balance sheet and the valuation.
Market Performance
Even with Wednesday’s sharp rally, Chewy is still trying to recover from a rough stretch. The stock had been down about 38% over the past six months before the post-earnings rebound, highlighting how badly sentiment had cooled heading into the results. That backdrop helps explain why the market reacted so aggressively to proof that customer growth, margin expansion, and cash generation are holding up.
Analysts Forecasts
Wall Street’s reaction suggests the debate is now shifting back toward upside. Barclays reiterated its Overweight rating and $48 price target after the report, saying Chewy’s fiscal 2026 growth guidance came in above consensus at the low end and reflected continued strength in customer additions and spend per customer.
Jefferies, while more cautious, reiterated a Hold rating with a $41 target after the results. There is a broader consensus rating of Moderate Buy with an average target of $46.05, implying that many analysts still see meaningful upside from current levels.
There is also a valuation argument starting to re-emerge. TD Cowen said before earnings that Chewy was trading at roughly 10 times enterprise value to EBITDA on its fiscal 2026 estimates, which it viewed as attractive given the company’s margin profile and long-term EBITDA growth potential. In other words, the stock’s recent selloff had already priced in a lot of bad news, leaving room for a sharp reversal once Chewy showed that execution remained intact.
Company Outlook
Chewy’s 2026 outlook is the key reason the stock is suddenly back on traders’ radar. Management guided for full-year 2026 net sales of $13.6 billion to $13.75 billion, or roughly 8% to 9% growth, with adjusted EBITDA margin expected at 6.6% to 6.8%. That implies adjusted EBITDA of about $900 million to more than $930 million. For Q1, Chewy sees net sales of $3.33 billion to $3.36 billion and adjusted diluted EPS of $0.40 to $0.45. Management also said Q1 should mark the low point for revenue growth this year, with growth expected to build through Q2 and strengthen further in Q3.
Is Chewy A Buy in 2026?
The company is showing better operating leverage, higher recurring sales mix, expanding margins, and stronger free cash flow, while still targeting more upside through private brands, health and wellness, and the SmartEquine acquisition. The main question now is whether that profitability momentum can continue fast enough to outweigh still-moderate revenue growth. After this quarter, the bull case looks a lot stronger than it did just a day ago.
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