Chewy (NYSE:CHWY) vs. Ross Stores (NASDAQ:ROST) Critical Survey

Chewy (NYSE:CHWY) and Ross Stores (NASDAQ:ROST) are both consumer discretionary companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.

Risk and Volatility

Chewy has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500. Comparatively, Ross Stores has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500.

Institutional and Insider Ownership

93.1% of Chewy shares are owned by institutional investors. Comparatively, 86.9% of Ross Stores shares are owned by institutional investors. 0.3% of Chewy shares are owned by company insiders. Comparatively, 2.1% of Ross Stores shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Chewy and Ross Stores’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chewy	2.09%	60.88%	7.83%
Ross Stores	10.85%	39.29%	15.79%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Chewy and Ross Stores, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chewy	1	7	17	1	2.69
Ross Stores	0	6	15	0	2.71

Chewy currently has a consensus price target of $30.64, suggesting a potential upside of 48.61%. Ross Stores has a consensus price target of $263.76, suggesting a potential upside of 16.40%. Given Chewy’s higher probable upside, research analysts plainly believe Chewy is more favorable than Ross Stores.

Valuation & Earnings

This table compares Chewy and Ross Stores”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chewy	$13.07 billion	0.65	$222.80 million	$0.66	31.23
Ross Stores	$22.75 billion	3.18	$2.15 billion	$8.26	27.43

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

Summary

Ross Stores beats Chewy on 8 of the 15 factors compared between the two stocks.

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.

About Ross Stores

Ross Stores, Inc., together with its subsidiaries, operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd’s DISCOUNTS brand names in the United States. Its stores primarily offer apparel, accessories, footwear, and home fashions. The company’s Ross Dress for Less stores sell its products at department and specialty stores to middle income households; and dd’s DISCOUNTS stores sell its products at department and discount stores for households with moderate income. Ross Stores, Inc. was incorporated in 1957 and is headquartered in Dublin, California.