Is Chewy, Inc. overvalued or undervalued?

As of 8 May 2025, the valuation grade for Chewy, Inc. has moved from attractive to fair. Based on the current analysis, Chewy appears to be overvalued. The company has a P/E ratio of 51, significantly higher than its peer Etsy, Inc., which has a P/E of 18.35. Additionally, Chewy's EV to EBITDA ratio stands at 85.22, compared to Etsy's 13.50, indicating a substantial premium over its peers.
In terms of financial performance, Chewy's ROE is exceptionally high at 148.89%, but this is overshadowed by its negative capital employed, which raises concerns about sustainability. The PEG ratio of 0.11 suggests that the stock may be undervalued based on growth expectations; however, this is contradicted by the elevated valuation multiples. Recent stock performance shows Chewy's YTD return of 29.47% outpacing the S&P 500's 2.44%, but the long-term view indicates a decline over the past five years. Overall, the combination of high valuation ratios and peer comparisons suggests that Chewy, Inc. is currently overvalued.