Etsy, Top-Rated Stock Near Buy Point Ahead Of Earnings, Aims To Hold Onto Coronavirus Recovery Gains

Although the pandemic slammed most companies, a select group including Etsy, (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.


Etsy has a 92 Composite Rating. The Composite Rating contains a mix of five other IBD stock ratings. The best growth stocks have a Composite Rating of 90 or better.

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%.

Other Top 5 Ranked Companies

Etsy is the No. 2 ranked stock in the Retail-Internet group. Shutterstock (SSTK) is No. 1, while eBay (EBAY) and Amazon (AMZN) are also among the top five ranked companies in the group.

Looking For Winning Stocks? Try This Simple Routine

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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