Critical Survey: Chewy (NYSE:CHWY) vs. Leslie’s (NASDAQ:LESL)

Leslie’s (NASDAQ:LESL) and Chewy (NYSE:CHWY) are both consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, dividends, analyst recommendations, earnings and profitability.

Earnings and Valuation

This table compares Leslie’s and Chewy”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Leslie’s	$1.24 billion	0.00	-$236.97 million	($27.08)	-0.02
Chewy	$12.60 billion	0.75	$222.80 million	$0.60	38.70

Chewy has higher revenue and earnings than Leslie’s. Leslie’s is trading at a lower price-to-earnings ratio than Chewy, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Leslie’s and Chewy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Leslie’s	-21.24%	N/A	-8.96%
Chewy	1.99%	60.02%	8.17%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Leslie’s and Chewy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Leslie’s	2	4	1	0	1.86
Chewy	1	6	18	1	2.73

Leslie’s currently has a consensus price target of $2.85, suggesting a potential upside of 383.05%. Chewy has a consensus price target of $31.50, suggesting a potential upside of 35.66%. Given Leslie’s’ higher possible upside, research analysts plainly believe Leslie’s is more favorable than Chewy.

Institutional & Insider Ownership

93.1% of Chewy shares are held by institutional investors. 0.5% of Leslie’s shares are held by company insiders. Comparatively, 0.3% of Chewy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

Leslie’s has a beta of 1.74, suggesting that its share price is 74% more volatile than the S&P 500. Comparatively, Chewy has a beta of 1.42, suggesting that its share price is 42% more volatile than the S&P 500.

Summary

Chewy beats Leslie’s on 12 of the 15 factors compared between the two stocks.

About Leslie’s

Leslie’s, Inc. operates as a direct-to-consumer pool and spa care brand in the United States. The company markets and sells pool and spa supplies and related products and services. It also offers various pool and spa maintenance items, such as chemicals, equipment and parts, cleaning and maintenance equipment, safety, recreational, and fitness related products. In addition, the company provides installation and repair services for pool and spa equipment. It also sells its products through e-commerce websites and third-party marketplaces. The company offers complimentary, commercial-grade in-store, water testing, and analysis services. It serves the residential, professional, and commercial consumers. Leslie’s, Inc. was founded in 1963 and is based in Phoenix, Arizona.

About Chewy

Chewy, Inc., together with its subsidiaries, engages in the pure play e-commerce business in the United States. It provides pet food and treats, pet supplies and pet medications, and other pet-health products, as well as pet services for dogs, cats, fish, birds, small pets, horses, and reptiles through its retail websites and mobile applications. The company was founded in 2010 and is based in Plantation, Florida.