Although the pandemic slammed most companies, a select group including Etsy, Amazon.com (AMZN) and Zoom Video Communications (ZM) not only survived. They thrived. IBD 50 member Etsy (ETSY) is forming a base offering a 251.96 entry just ahead of its next quarterly EPS report, expected on May 5. With the Covid virus on the run for now and businesses reopening, the question is: Can Etsy hold onto the market share gains of the past year?
Etsy Seen Putting Up 740% Profit Growth
Etsy has carved a strong niche providing a platform for people to buy and sell handcrafted goods. Analysts expect earnings growth of 740% for the quarter, and 10% growth for the full year. Annual growth estimates were recently revised lower. The pattern is a second-stage consolidation. Breakouts stand a better chance of succeeding in the first and second stages than in later stages.
Brooklyn, N.Y.-based Etsy also sports a best-possible 99 EPS Rating after three straight quarters of triple-digit earnings growth. One yellow flag to watch is the C- Accumulation/Distribution Rating on an A+ to E scale with A+ tops. The C- rating means funds and other institutions are selling more shares than buying.
In terms of fundamentals, Etsy has recorded triple-digit profit growth for the last three quarters. Revenue also grew at a 100%-plus rate during that period.
EPS in its most recent period shot up 332% to $1.08. The prior two periods it saw EPS gains of 426%, then 483%. Sales last quarter jumped 129% to $617.4 million, following gains of 137% and 128%. Etsy was trading at 208.50 Wednesday afternoon, up 0.7%.
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Etsy’s pattern is a second-stage consolidation. Understand that buying a stock just ahead of earnings involves risk since you typically don’t have enough time to build a profit cushion before the latest quarterly numbers come out.
Note: Dates for earnings reports are subject to change. Check the company’s website for any updates.
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