Chewy vs. Central Garden & Pet: Which Pet-Care Stock Has an Edge?

Chewy, Inc. CHWY and Central Garden & Pet Company CENT are two prominent players in the pet care industry, each pursuing distinct strategies to capitalize on the resilient demand trends and evolving consumer preferences.Chewy, with a market capitalization of roughly $8 billion, has established itself as a leading digital-first pet care platform. The company’s growth is fueled by its successful Autoship subscription model, expansive e-commerce infrastructure and growing presence in pet healthcare through pharmacy services, veterinary clinics and telehealth offerings. In contrast, Central Garden & Pet, with a market capitalization of approximately $3 billion, operates a diversified portfolio spanning pet and garden categories. The company owns a collection of leading brands across pet consumables, animal health, treats, pet bird products and outdoor living categories. Its business benefits from strong retail relationships, a broad distribution network and acquisitions.As investors evaluate opportunities within the sector, the question remains: which company currently offers better upside?The Case for CHWYChewy continues to strengthen its position as a leading digital pet-care platform, supported by steady market-share gains, rising customer engagement and a resilient business model. The company delivered 7.7% sales growth in the first quarter of fiscal 2026 and added nearly 200,000 net customers, reflecting the durability of pet spending and the strength of its value proposition. These trends position Chewy to outperform the broader pet category despite a softer consumer environment.A key pillar of Chewy’s growth is its Autoship program, which accounted for 84.4% of first-quarter fiscal 2026 net sales and continued to outpace overall company growth. The subscription-based model enhances customer retention, improves revenue visibility and supports higher lifetime value. In addition, growing penetration of health and wellness products helped drive net sales per active customer to $597, reinforcing wallet-share gains across the platform.Technology is also becoming an increasingly important competitive advantage. Chewy is embedding artificial intelligence across customer service, fulfillment, pharmacy and marketing operations to improve efficiency and enhance customer experiences. Management expects AI initiatives to generate low 10s of millions of dollars in benefits during fiscal 2026, creating a scalable path toward further margin expansion and operational leverage.The company is simultaneously expanding its presence in pet healthcare, one of the largest growth opportunities within the industry. Chewy Vet Care clinics continue to support customer acquisition and retention, while the acquisition of Modern Animal adds a complementary technology-enabled veterinary platform. Together, these initiatives are expected to accelerate clinic expansion, with Chewy targeting approximately 60 clinics by the end of fiscal 2026 and an embedded revenue contribution approaching $290 million at steady state.Chewy recently lowered its fiscal 2026 sales outlook to $13.40-$13.55 billion from the previously mentioned $13.6-$13.75 billion, reflecting a more cautious consumer backdrop, softer premiumization trends and lower product attach rates. Despite these near-term pressures, the company continues to gain market share and expand profitability through sponsored advertising, favorable product mix, healthcare growth and AI-driven efficiencies.The Case for CENTCentral Garden & Pet is benefiting from a stronger operational foundation built through years of cost and simplicity initiatives. The company continues to streamline its operations through distribution network optimization, manufacturing consolidation and supply-chain efficiencies, creating a more agile and efficient business model. Recent actions, including the integration of DoMyOwn into its Covington fulfillment center and the consolidation of manufacturing operations within its dog and cat platform, are enhancing execution, lowering costs and improving scalability.The company's diversified portfolio across pet and garden categories remains a key competitive advantage, providing stability and broad market exposure. In the second quarter of fiscal 2026, the pet segment’s sales increased 5% year over year to $477 million, driven by continued strength in Dog & Cat and Animal Health products. Central also maintained overall market share while recording gains in categories such as rawhide, dog treats, flea and tick, pet bird, and professional products, highlighting resilient demand across its core pet businesses.Central Garden & Pet is also improving the quality of its earnings through portfolio optimization, a favorable product mix and disciplined execution. Management continues to focus on higher-margin consumables categories, particularly dog and cat, equine and professional products, while leveraging productivity initiatives across the organization. These efforts contributed to the pet segment operating margin expansion of 290 basis points to 16.3% and adjusted EBITDA margin growth of 200 basis points to 18.6% in the latest quarter, demonstrating the benefits of a more streamlined and profitable operating model.Growth is further supported by innovation, strategic partnerships and disciplined capital allocation. Following the quarter, Central Garden & Pet partnered with Phillips Pet Food & Supplies to create a more efficient nationwide pet distribution network. The transaction simplifies the company's operating model, reduces complexity and allows greater focus on its branded portfolio while retaining a 20% ownership stake in the venture. At the same time, Central Garden & Pet continues to invest in innovation across brands such as Nylabone and Farnam, strengthening retailer relationships and supporting growth opportunities.Central Garden & Pet's strong financial position provides additional flexibility to execute its growth strategy. The company ended the second quarter with $653 million in cash and cash equivalents, gross leverage of 2.8X and no borrowings under its credit facility. Supported by a strong balance sheet, ongoing productivity improvements and the reaffirmed fiscal 2026 adjusted EPS guidance of $2.70 or better, Central Garden & Pet appears well-positioned to drive profitable growth and long-term shareholder value creation.How Does the Zacks Consensus Estimate Compare for CHWY & CENT?The Zacks Consensus Estimate for Chewy’s current fiscal-year sales and EPS implies growth of 7.2% and 20.5%, respectively, from the year-ago period’s actuals. For the next fiscal year, the consensus estimate indicates an 7.6% rise in sales and 22.2% growth in earnings. The consensus estimate for EPS for the current fiscal year has decreased 10 cents to $1.53 over the past 60 days, while for the next fiscal year, it has declined by 12 cents to $1.87.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for Central Garden & Pet’s current fiscal-year sales and EPS implies a decline of 5.7% and growth of 5.9%, respectively, from the year-ago period’s actuals. For the next fiscal year, the consensus estimate indicates a 6.4% decline in sales and 7.3% growth in earnings. The consensus estimate for EPS for the current and next fiscal year has increased 7 cents and 11 cents, respectively, to $2.89 and $3.10, respectively, over the past 60 days.Image Source: Zacks Investment ResearchAssessing Recent Stock Performances of CHWY & CENTChewy’s shares have lost 32.8% over the past three months. Meanwhile, Central Garden & Pet’s stock has gained 15.2%.Image Source: Zacks Investment ResearchDive Into Stock Valuations of CHWY & CENTChewy is trading at a forward price-to-sales (P/S) multiple of 0.53, down from its median of 0.97 in the last three years. Central Garden & Pet’s forward 12-month P/S multiple sits at 0.96, above its median of 0.74 in the last three years.Image Source: Zacks Investment ResearchCHWY or CENT: Which Offers Greater Potential?While Chewy remains an attractive long-term player with strong digital capabilities, recurring customer engagement and expanding healthcare initiatives, Central Garden & Pet currently appears to hold the edge for investors. The company’s diversified business model, strong portfolio of established brands, ongoing operational improvements and disciplined capital allocation provide a balanced combination of stability and profitability.In addition, Central Garden & Pet’s focus on higher-margin categories, partnerships and consistent execution has strengthened its competitive position. With improving analyst sentiment, solid financial flexibility and a proven ability to drive efficiency while maintaining market share, Central Garden & Pet offers a more compelling opportunity.Chewy currently carries a Zacks Rank #4 (Sell), whereas Central Garden & Pet flaunts a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks