Chewy (CHWY -0.63%) has been a top growth stock in 2020 as the novel coronavirus pandemic has fueled the online pet retailer's sales, but it has lost a lot of ground in September despite a solid set of quarterly results.

The sale of shares by CEO Sumit Singh may have dented investor confidence in Chewy stock. But a closer look at the company's latest results indicates that it isn't done growing yet and could regain its mojo once again.

Let's see why.

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Chewy has momentum on its side

Chewy's fiscal second-quarter revenue shot up 47% year over year to $1.7 billion. The company's gross margin increased by 190 basis points annually to 25.5% last quarter. The terrific top-line growth and the improved margin profile helped the company increase its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) by 153% over the prior-year period to $15.5 million last quarter.

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There are two reasons why Chewy was able to deliver such impressive growth in the fiscal second quarter. First, the company's active customer count shot up nearly 38% year over year to 16.6 million during the quarter. Second, the net sales per active customer increased by 3.2% over the same period last year to $356.

Chewy's Autoship subscription business -- which automatically reorders and delivers supplies to pet parents -- witnessed 45% revenue growth over the prior-year period to $1.16 billion, accounting for just over 68% of sales. This was the second consecutive quarter of more than $1 billion in sales for Autoship. Another interesting fact is that Chewy's new active customer additions in the first two quarters of the current fiscal year have surpassed the total number of active customers it added in 2019.

More importantly, the new customers gained by Chewy are likely to stick in the long run as per studies carried out by the company. Management has been observing the behavior of the new customers it has gained in the post-COVID scenario and comparing them to customers acquired before the pandemic struck.

The good part is that Chewy's pre- and post-COVID customers are showing a "high degree of consistency" in behavior. This bodes well for the company's long-term prospects, as it expects its more mature customer base to hit $500 in net sales per active customer in their second year with Chewy and $700 by the fifth year. Additionally, Chewy says that it has a broader selection of items to offer to its new customers that could lead to bigger purchases in the future.

So, the gains that Chewy has made during the pandemic are likely to help the company secure its position in a market that's getting bigger every year. Quoting data from Packaged Facts, Chewy points out that the market share of online pet retail is expected to increase by five percentage points this year to 27% of the overall industry.

The data also points out that the U.S. online pet retail industry is anticipated to add $3.9 billion in sales this year. This means that Chewy is on track to corner more than half of that new opportunity, as it expects to deliver $2 billion in sales growth in 2020.

More things to like

Chewy is stepping up its game to maintain its dominance in the U.S. online pet retail industry. The company has added new logistics capabilities and fulfillment centers this year to cater to the increased demand. But Chewy isn't done yet, and it will launch its 10th fulfillment center in Pennsylvania next month. It also plans to add an automated facility by mid-2021 that's expected to increase productivity and capacity, while lowering fixed and variable fulfillment costs per unit by 30%.

Such moves should help Chewy boost margins and increase its earnings power. Not surprisingly, analysts' estimates compiled by Yahoo! Finance expect Chewy's earnings growth rate to double next year as compared to the current fiscal year.

In all, Chewy has a lot going for it right now. The recent pullback in the company's shares looks like an opportunity for savvy investors in the hunt for a growth stock, as this online pet retailer could offer more upside.