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Chewy (CHWY) Surges 6.6%: Is This an Indication of Further Gains?

Chewy CHWY shares rallied 6.6% in the last trading session to close at $18.54. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 3.3% loss over the past four weeks.

Chewy’s shares have been gaining momentum in the market due to its resilience in the pet industry. Chewy's Autoship-subscription program has been a game changer in pet retail industry. By offering customers the convenience of regularly scheduled deliveries, Chewy not only enhances customer satisfaction but also ensures an upside in the revenue stream. Furthermore, Chewy’s expansion into the veterinary care space represents a strategic move which will create new opportunities for growth and profitability. Investors may indeed have the above reasons to be excited about the upcoming development in the company.

This online pet store is expected to post quarterly earnings of $0.21 per share in its upcoming report, which represents a year-over-year change of +5%. Revenues are expected to be $2.87 billion, up 2.9% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

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For Chewy, the consensus EPS estimate for the quarter has been revised 9.7% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on CHWY going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Chewy belongs to the Zacks Consumer Products - Staples industry. Another stock from the same industry, ARKO Corp. (ARKO), closed the last trading session 0.6% lower at $4.82. Over the past month, ARKO has returned -17%.

ARKO's consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.17. Compared to the company's year-ago EPS, this represents a change of -466.7%. ARKO currently boasts a Zacks Rank of #4 (Sell).

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