Pet e-commerce company Chewy (CHWY 1.91%) has now put up back-to-back solid earnings reports since the high-growth tech stock sell-off started this past March. Shares are down 18% so far this year as a result, including down 36% from all-time highs as of this writing.

This four-legged friend tech innovator is doing just fine, though. In fact, shares look like a downright good deal right now. If you haven't done so already, now looks like the time to adopt this pet care leader into your portfolio.

Pets love e-commerce, too

Chewy said it ended its first quarter of 2021 (the three months ended May 2, 2021) with 19.8 million customers, a 32% increase year over year. These pet parent households spent on average $388, an almost 9% increase. Over 69% of them use Chewy's popular autoship option, in which food and other supplies are automatically delivered on a recurring basis -- creating a highly predictable stream of revenue for Chewy.  

Someone sitting on a floor working on a home improvement project with a dog sitting next to them.

Image source: Getty Images.

As a result, the pet e-comm leader said total sales and adjusted EBITDA were a respective $2.14 billion and $77.4 million in Q1. Sales represented a 32% increase, and adjusted EBITDA during the same period a year ago was only $3.44 million. Clearly Chewy is in the early stages of reaching a profitable scale as it adds new pet-owning families to the fold.  

The solid quarterly report prompted a full-year 2021 upgrade. Management now says revenue will be $8.9 billion to $9.0 billion (25% to 26% growth, about $100 million more than the previous outlook). Adjusted EBITDA margin should be between 2% and 2.4% -- which works out to an adjusted EBITDA range of $178 million to $216 million.  

Not bad considering Chewy is still spending heavily to promote expansion. Profit margin also factors for supply chain constraints, out-of-stock issues, and other general cost increases related to the reopening of the economy this year. 

Tech for the whole pack

Chewy has experienced rapid growth the last two years, and effects from the pandemic made its e-commerce platform and set-it-and-forget-it autoship feature that much more sticky. Specifically, 8.4 million households have been added since 2019. Management explained this means the weighted average tenure of pet owners and their pet partners using its site is less than two years. Average annual spend for these newer customers is less than $400, but long-term Chewy fans spend much more. Average household spending is at $700 for those dogs and cats that have been Chewy patrons for five years.  

Put another way, Chewy isn't just growing by adding new pet shoppers. Existing households alone represent a big growth opportunity in the years ahead, which will equate to greater business efficiency and higher profitability. The tech outfit is building on this potential. It recently launched a foray into fresh food, offering products from fellow pet upstart Freshpet (FRPT 1.97%) as well as Chewy's own brand Tylee's. 

Pet care services are also making headway. Chewy Health launched a telehealth line "Connect with a Vet" last quarter, and virtual vet professionals are now available seven days a week, 365 days a year. Paired with its pharmacy business (which now includes over 7,000 vets and clinics that use Chewy to automate prescriptions for four-legged friends), this e-commerce site has turned into a real tech powerhouse for all members of the pack.

To top it off, Chewy is still solely based here in the U.S. and hasn't even started entering markets outside of the states yet. On the Q1 conference call, CEO Sumit Singh said that's still a "one to five year plan." Clearly, Chewy is taking a disciplined approach to any international expansion that might be coming down the road, but it will have a well-trained template for success here in the U.S. if and when it does.

As of this writing, Chewy trades for about 3.5 times expected full-year 2021 sales. Profitability is still minimal and doesn't offer anything meaningful in the way of valuing the business at this juncture, but the company is obviously quickly reaching a profitable scale with lots more potential via new product launches and pet care. Given the company's alpha dog status in pet e-commerce and its enduring growth story, this stock looks like a long-term value.