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Etsy (ETSY) Dips More Than Broader Markets: What You Should Know

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Etsy (ETSY - Free Report) closed at $110.57 in the latest trading session, marking a -1.9% move from the prior day. This change lagged the S&P 500's 1.76% loss on the day. Elsewhere, the Dow lost 1.45%, while the tech-heavy Nasdaq lost 1.99%.

Heading into today, shares of the online crafts marketplace had lost 7.65% over the past month, lagging the Computer and Technology sector's gain of 1.8% and the S&P 500's gain of 1.56% in that time.

ETSY will be looking to display strength as it nears its next earnings release. In that report, analysts expect ETSY to post earnings of $0.57 per share. This would mark year-over-year growth of 375%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $410.86 million, up 107.55% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.05 per share and revenue of $1.51 billion, which would represent changes of +169.74% and +84.47%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for ETSY. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ETSY is holding a Zacks Rank of #1 (Strong Buy) right now.

In terms of valuation, ETSY is currently trading at a Forward P/E ratio of 54.89. This valuation marks a premium compared to its industry's average Forward P/E of 37.74.

We can also see that ETSY currently has a PEG ratio of 2.07. 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. The Internet - Services was holding an average PEG ratio of 2.14 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 125, putting it in the top 50% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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