Chewy vs. Five Below: Which Retailer Stock Is a Better Buy for 2027?

Both Chewy Inc. (CHWY) and Five Below Inc. (FIVE) are competing to capture a share of discretionary spending, but their operational approaches differ significantly. Chewy specializes in e-commerce for pet owners, while Five Below is a physical retail chain selling low-cost items for kids, pre-teens, and teens.

Chewy reported a revenue of approximately $12.6 billion in FY 2025, a 6.2% increase year-over-year. The company generates recurring revenue through its Autoship subscription program and high-margin services like pharmacy and telehealth. Its net margin was around 1.8% as of the end of the 2025 fiscal year. Chewy's debt-to-equity ratio is approximately 1.0, meaning its total debt equals shareholder equity. The company's current ratio is about 0.9, indicating its ability to cover short-term liabilities with short-term assets.

On the other hand, Five Below reported sales of about $4.8 billion in FY 2025, which grew by nearly 23% year-over-year. The company generated a net income of $358.6 million during this period, resulting in a net margin of roughly 7.5%. The company's debt-to-equity ratio is approximately 0.9, and its current ratio stands at about 2.0, reflecting a strong ability to meet immediate financial obligations. Five Below's free cash flow for fiscal 2025 was close to $411.7 million.

Valuation metrics suggest that Five Below may offer a more attractive entry point based on future earnings estimates, while Chewy presents a lower entry point based on sales volume. As Chewy expands its Autoship program and explores high-growth areas like veterinarian and general pet health services, it faces competition from brick-and-mortar retailers like PetSmart and Petco. Meanwhile, Five Below relies on rapid store growth and effective distribution to navigate international trade policies and inventory-related risks.