Etsy (ETSY) Outpaces Stock Market Gains: What You Should Know

In the latest trading session, Etsy (ETSY) closed at $137.85, marking a +1.4% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.35%. Elsewhere, the Dow lost 0.1%, while the tech-heavy Nasdaq added 0.37%.

Coming into today, shares of the online crafts marketplace had gained 19.58% in the past month. In that same time, the Computer and Technology sector gained 5.54%, while the S&P 500 gained 4.32%.

ETSY will be looking to display strength as it nears its next earnings release, which is expected to be October 28, 2020. On that day, ETSY is projected to report earnings of $0.59 per share, which would represent year-over-year growth of 391.67%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $418.72 million, up 111.53% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.08 per share and revenue of $1.52 billion. These totals would mark changes of +173.68% and +85.27%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for ETSY. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.5% higher within the past month. ETSY is currently a Zacks Rank #3 (Hold).

Digging into valuation, ETSY currently has a Forward P/E ratio of 65.36. This valuation marks a premium compared to its industry's average Forward P/E of 38.64.

It is also worth noting that ETSY currently has a PEG ratio of 2.3. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. ETSY's industry had an average PEG ratio of 2.21 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 201, which puts it in the bottom 21% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow ETSY in the coming trading sessions, be sure to utilize

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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