Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Forget Shopify and Buy Soaring Etsy Stock Before Q4 Earnings?

By Zacks Investment ResearchStock MarketsFeb 19, 2021 06:25AM ET
www.investing.com/analysis/forget-shopify-and-buy-soaring-etsy-stock-before-q4-earnings-200562105
Forget Shopify and Buy Soaring Etsy Stock Before Q4 Earnings?
By Zacks Investment Research   |  Feb 19, 2021 06:25AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Arts and craft fair-style e-commerce firm Etsy (NASDAQ:ETSY) ETSY has outclimbed Shopify (NYSE:SHOP) SHOP, Zoom Video ZM, and many other pandemic stars, and is neck-and-neck with Tesla’s TSLA torrid pace over the past year. The firm has ripped off back-to-back quarters of around 130% revenue growth, as consumers turned to digital channels.

The question heading into its Q4 earnings release on February 25 is will Etsy be able to keep up the pace, or will things cool off as people return to something closer to their normal lives…

Etsy’s Pitch

Etsy is an e-commerce marketplace that allows individuals and small businesses to sell everything from clothing and jewelry to art and home décor. The online retailer that was founded in 2005 and went public in 2015 also owns musical instrument marketplace Reverb. And Etsy’s two-sided online marketplace has become far more popular during the pandemic.

The Brooklyn-based company has carved out a solid niche within the booming industry by selling items consumers might not be able to find on Amazon AMZN and eBay EBAY. Etsy makes money from every transaction, as well as advertising and paid search. The company is also continually trying to improve its features for both buyers and sellers.

Last quarter, Etsy grew its active sellers by 42% to 3.7 million, while its active buyers jumped 55% to 70 million. The company’s gross merchandise sales soared 119% to $2.63 billion and its overall Q3 revenue jumped 128% to $451 million—to fall just short of Q2’s 137% revenue growth.

Face mask sales have helped drive some of Etsy’s pandemic expansion, which is clearly a cause for concern since these sales don’t appear sustainable. Luckily, excluding mask sales, Etsy’s gross merchandise sales still climbed 93% in the third quarter.

Outlook

Etsy shares have skyrocketed 315% in the last year and over 60% in the last three months. The stock popped 3% during regular trading hours on Friday to $227 a share, to put it not far off its early February records. And the stock is not just a coronavirus anomaly. In fact, Etsy’s 970% run over the last three years helps it outpace Shopify, and its growth over the last five years is even more impressive.

Etsy is trading at its highest forward sales multiple at the moment. Yet, at 15.1X forward 12-month sales, it represents a big discount to Shopify’s 42.9X. And it rests at around 61 in terms of the Relative Strength Index—an RSI above 70 is often regarded as overbought, with any number below 30 considered oversold.

The company was also growing long before the pandemic, with its 2019 and 2018 sales both up roughly 36%. With this in mind, Zacks estimates call for its adjusted Q4 earnings to surge 136% to $0.59 a share on 91% stronger revenue.

Etsy’s fiscal 2020 revenue is projected to climb roughly 100% from $818 million in FY19 to $1.63 billion, with its adjusted earnings expected to jump 182%.

Bottom Line

Etsy’s earnings revision help it land a Zacks Rank #3 (Hold) right now. The company has topped our earnings and revenue estimates in the last two quarters, and even though the pandemic conditions will be nearly impossible to recreate, the e-commerce market is still in the early days.

For instance, e-commerce accounted for roughly 14% of total U.S. retail sales in the third quarter. This was up from 11% last year, but down from a record 16% in Q2. However, a slowdown appears to be coming, with Etsy’s 2021 revenue projected to climb 10% above a hard-to-compare FY20, with its EPS figure currently projected to slip 10%.

Wall Street remains high on Etsy, and 12 of the 15 brokerage recommendations that Zacks has for the stock come in at a “Strong Buy” right now. That said, investors might want to hold off on the red-hot e-commerce stock until Etsy executives provide updated guidance on what they expect life after the vaccine might look like.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Amazon.com, Inc. (NASDAQ:AMZN): Free Stock Analysis Report

eBay Inc. (NASDAQ:EBAY): Get Free Report

Tesla, Inc. (NASDAQ:TSLA): Free Stock Analysis Report

Etsy, Inc. (ETSY): Get Free Report

Shopify Inc. (SHOP): Get Free Report

Zoom Video Communications, Inc. (NASDAQ:ZM): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research
Forget Shopify and Buy Soaring Etsy Stock Before Q4 Earnings?
 

Related Articles

Forget Shopify and Buy Soaring Etsy Stock Before Q4 Earnings?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email