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Etsy (ETSY) to Report Q1 Earnings: What's in the Cards?

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Etsy, Inc. (ETSY - Free Report) is slated to report first-quarter 2019 results on May 8.

Notably, the company has surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive surprise of 57.06%.

Past-Quarter Performance

In the last reported quarter, Etsy’s earnings of 32 cents per share, delivered a positive earnings surprise of 3.23%. The bottom line was higher than prior-quarter figure of 15 cents but was lower than 36 cents reported in the year-ago quarter.

Revenues advanced 46.8% year over year and 32.9% sequentially to $200.02 million. The figure also outpaced the Zacks Consensus Estimate of $194 million. The top line was driven by solid performance of the company in the holiday season.

For the first quarter, the Zacks Consensus Estimate for earnings and revenues is pegged at 14 cents per share and $169.3 million, respectively.

Let’s see how things are shaping up for this announcement.

Etsy, Inc. Price and EPS Surprise

Etsy, Inc. Price and EPS Surprise | Etsy, Inc. Quote

Factors to Consider

Etsy’s continued focus toward strengthening ecosystem on its platform for both sellers and buyers is likely to expand its addressable market size in the to-be-reported quarter.

Moreover, strong efforts toward proper execution of its key initiatives — search and discovery, customer liability, marketing, seller tools and services, will aid the upcoming quarterly results.

Additionally, continued investment in both the infrastructure and high potential marketing channels are anticipated to deliver enhanced product experience to both the parties.

Further, strengthening relationships with sellers are likely to continue expanding the company’s active buyer as well as habitual buyer bases. This is likely to bolster Etsy’s buyer to seller ratio in the to-be-reported quarter.

In addition to this, the company’s robust pricing model and growing Promoted Listings remain major positives for its marketplace business growth.

During the first quarter, Etsy has boosted its product development initiatives. Further, it has reduced marketing spend which is anticipated to aid adjusted EBITDA growth in the first quarter.

Further, the redesigned seller payment accounts are expected to lower the company’s credit card fees for processing seller bill payments, which in turn will the company in expanding its gross margin.

All these strong endeavours are anticipated to benefit the company’s results in the to-be-reported quarter.

However, macroeconomic headwinds and uncertainty regarding global consumer spending remain major concerns.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Etsy has a Zacks Rank #4 and an Earnings ESP of 0.00%, which shows that it is unlikely to beat estimates in first quarter.

Stocks That Warrant a Look

Here are a few stocks worth considering as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming release.

MongoDB, Inc. (MDB - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agilent Technologies, Inc. (A - Free Report) has an Earnings ESP of +2.10% and a Zacks Rank #2.

TripAdvisor, Inc. (TRIP - Free Report) an Earnings ESP of +15.51% and a Zacks Rank #3.

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