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Bull of the Day: Etsy (ETSY)

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Headquartered in Brooklyn, New York, Etsy Inc. (ETSY - Free Report) is a fast-growing e-commerce company that provides online and offline marketplaces to buy and sell goods. Available products range from art, home and living décor, and mobile accessories to jewelry, wedding goods, and much more. Etsy operates throughout the world, since sellers can set up shop right from their computer.

Impressive Q3 Earnings

Shares of Etsy surged as much as 25% after the company reported higher-than-expected third quarter earnings results last week.

Earnings of 15 cents per share crushed the Zacks Consensus Estimate of 7 cents per share.

Revenues of $150.4 million matched our consensus estimate, and were up 41.3% year-over-year, while gross merchandise sales (GMS) rose 20% to $923 million.

In the earnings release, CEO Josh Silverman said “Etsy’s growth accelerated again in Q3, on a currency neutral basis, and we achieved several key milestones. We put our new pricing structure to work by increasing investments in marketing and product initiatives to fuel growth. We also completed a major step in our migration to the Cloud, a key foundational investment as we scale for future growth.”

Etsy also raised its outlook fort the full year. The company now expects revenue and GMS growth to fall between 35% and 36% and 19% and 20%, respectively. Earnings also got a boost, and management now anticipates full-year EBITDA between $132 and $138 million.

Price Performance

Etsy, Inc. Price and Consensus

Etsy, Inc. Price and Consensus | Etsy, Inc. Quote

Year-to-date, ETSY stock has gained around 150%, and shares are up over 200% over the past 12 months. In comparison, the S&P 500 is only up 2.6% and 6.4%, respectively.

Estimates have been rising lately too, pushing the stock towards a Zacks Rank #1 (Strong Buy).

For the current fiscal year, Etsy’s earnings are expected to grow almost 30% year-over-year. The Zacks Consensus Estimate has moved 8 cents higher in the past 60 days from $0.41 to $0.49 cents per share.

Next year looks pretty strong too, and earnings are expected to grow over 43%; the consensus estimate sits at $0.70 cents per share, with five upward revisions in the last two months.

Bottom Line

Overall, Etsy’s Q3 report told investors that it was still a huge force in the world of crafts and handmade goods, and that competitors like Amazon’s (AMZN - Free Report) Handmade weren’t hurting its potential for future growth.

Despite a rough October performance—ETSY was one of many stocks to post a big decline last month, as the broader markets dipped into correction territory—the popular e-commerce platform has managed to rebound in November.

For those investors looking for an e-commerce stock to add to their portfolio, ETSY should definitely be on the shortlist.

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