Chewy vs. MercadoLibre: Which E-Commerce Stock Is a Better Buy in 2026?

Sara Appino, The Motley Fool

Sat, September 12, 2026 at 8:39 PM GMT+3 6 min read

Investors often debate whether to prioritize specialized niche leaders or regional giants. Choosing between Chewy (NYSE:CHWY) and MercadoLibre (NASDAQ:MELI) requires deciding which growth engine is a better buy today.

Chewy focuses on the essential pet care market in the United States, providing everything from food to healthcare services. MercadoLibre serves as the dominant e-commerce and fintech hub for Latin America. The comparison exists because both represent digital-first leaders in the consumer discretionary space that rely on high customer loyalty.

The case for Chewy

Chewy sells nearly 190,000 pet products and services to roughly 21.7 million active customers. In its latest annual report, filed for the fiscal year 2025, the company highlighted its position among retail stocks while expanding its physical clinic network. It maintains relationships with roughly 4,000 brands and supports nearly 20,000 veterinary practices via its PracticeHub platform. The Autoship program continues to drive recurring sales from loyal pet parents.

In FY 2025, revenue reached nearly $12.6 billion, representing growth of approximately 6.2% compared to the previous year. The net income for this period was roughly $222.8 million. This result represents a net margin, or the percentage of revenue remaining after all expenses, of approximately 1.8%. These figures show a business that is consistently profitable while continuing to expand its footprint in the pet healthcare space.

As of its February 2026 balance sheet, the debt-to-equity ratio was nearly 1.1x, which compares total debt to shareholder equity. The current ratio, which measures the ability to pay short-term bills with current assets, was roughly 0.9x. Free cash flow, or the cash remaining after capital investments, reached nearly $562.4 million. Note that stock-based compensation represented roughly 43.1% of operating cash flow, which inflates reported cash generation since SBC is a non-cash expense added back in the cash flow statement.

The case for MercadoLibre

MercadoLibre operates a massive ecosystem in Latin America, combining its e-commerce marketplace with its fintech division, Mercado Pago. The marketplace serves as a hub for third-party sellers, while the fintech arm provides digital accounts, payment processing, and credit services. According to its latest annual report, filed for the fiscal year 2025, the company also leverages a proprietary logistics network, Mercado Envios, to ensure fast delivery. This integrated approach, which includes the Meli+ loyalty program, helps drive high engagement among its 131 million unique buyers.

During FY 2025, revenue climbed to nearly $28.9 billion, a substantial 39.1% increase over the prior year. Net income for the year was approximately $2.0 billion. This resulted in a net margin of close to 6.9%, which reflects the profitability of both the marketplace and the higher-margin financial services segments. These results highlight the ability of the business to scale rapidly across diverse geographic markets.

As of its December 2025 balance sheet, the debt-to-equity ratio was roughly 1.7x. This metric shows the relationship between total debt and shareholder equity. The current ratio was approximately 1.2x, suggesting it has more than enough short-term assets to cover its immediate obligations. Free cash flow, or the cash remaining after capital investments, was nearly $10.8 billion. This strong cash generation supports its ongoing expansion into new financial products and logistics hubs.

Risk profile comparison

Chewy faces intense competition from established giants like Amazon (NASDAQ:AMZN) and various mass-market retailers that have larger fulfillment infrastructures. The company is also navigating risks related to its acquisition of Modern Animal and the rapid scale-up of its physical veterinary clinics. Furthermore, it remains highly dependent on third-party shipping providers. Any disruption in its supply chain or fulfillment network could immediately impact its ability to remain profitable.

MercadoLibre operates in a dynamic environment with intensifying pressure from global players like Amazon and low-price entrants from Asia. Its fintech operations face extensive and evolving financial regulations in every country where it operates, which increases the cost of compliance. Additionally, the company is exposed to significant currency volatility and inflationary pressures in key markets like Argentina and Brazil. Protecting its infrastructure from cyberattacks and fraudulent activities is also a critical, ongoing challenge for the business.

Valuation comparison

Chewy features a lower Forward P/E, which measures price against future earnings estimates, and a lower P/S ratio, which compares market value to revenue.

Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?

I'd go with MercadoLibre. The scale of the opportunity it is chasing and the pace at which it is capturing it put it in a different category entirely from Chewy. To Chewy's credit, it is a well-run business with a loyal customer base that keeps spending. Autoship sales account for the vast majority of revenue and active customers are growing. For investors who want a steady, predictable consumer business, Chewy has its appeal.

But Chewy is growing at a modest pace in a pet market that is still under pressure from cautious consumer spending. The pet market in the U.S. is large but not expanding the way Latin America's digital economy is, and that limits how fast Chewy can grow from here.

MercadoLibre crossed $10 billion in quarterly revenue for the first time in Q2 2026, growing at the fastest pace in four years, with commerce and fintech accelerating simultaneously across Latin America. The company is sacrificing some near-term profit to fund free shipping, credit card expansion, and logistics infrastructure. But in a region where the e-commerce and fintech markets are still wide open, that kind of investment seems likely to pay off over time.

For a long-term investor, the size of MercadoLibre's opportunity and the pace at which it is capturing it make it the stronger pick right now.

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Sara Appino has positions in Amazon and MercadoLibre. The Motley Fool has positions in and recommends Amazon, Chewy, and MercadoLibre. The Motley Fool has a disclosure policy.

Chewy vs. MercadoLibre: Which E-Commerce Stock Is a Better Buy in 2026? was originally published by The Motley Fool