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Etsy (ETSY) Outpaces Stock Market Gains: What You Should Know

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Etsy (ETSY - Free Report) closed at $170.79 in the latest trading session, marking a +1.92% move from the prior day. The stock outpaced the S&P 500's daily gain of 1.49%. Elsewhere, the Dow gained 0.69%, while the tech-heavy Nasdaq added 2.56%.

Prior to today's trading, shares of the online crafts marketplace had gained 5.24% over the past month. This has outpaced the Computer and Technology sector's gain of 0.53% and the S&P 500's gain of 1.44% in that time.

ETSY will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.59, up 136% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $510.69 million, up 89.14% from the year-ago period.

It is also important to note the recent changes to analyst estimates for ETSY. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. The Zacks Consensus EPS estimate has moved 0.05% higher within the past month. ETSY is holding a Zacks Rank of #2 (Buy) right now.

Investors should also note ETSY's current valuation metrics, including its Forward P/E ratio of 81.74. This represents a premium compared to its industry's average Forward P/E of 30.18.

Also, we should mention that ETSY has a PEG ratio of 2.8. 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. ETSY's industry had an average PEG ratio of 1.64 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 109, putting it in the top 43% 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.

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