For Immediate Release
Chicago, IL – March 26, 2021 – Zacks Equity Research Shares of Etsy, Inc. (
ETSY Quick Quote ETSY - Free Report) as the Bull of the Day, WW International, Inc. ( WW Quick Quote WW - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Rent-A-Center, Inc. ( RCII Quick Quote RCII - Free Report) , Sleep Number Corporation ( SNBR Quick Quote SNBR - Free Report) and Amkor Technology, Inc. ( AMKR Quick Quote AMKR - Free Report) .
Here is a synopsis of all five stocks:
Etsy was the right company for the pandemic times. This Zacks Rank #1 (Strong Buy) had a transformative, and record, year in 2020 as consumers across the world turned to online shopping during the coronavirus pandemic.
Can it keep the momentum or is all the good news priced in?
Etsy operates an online marketplace that features homemade products and goods by artists and craftspeople from around the world.
Another Big Beat in the Fourth Quarter of 2020
On Feb 25, Etsy reports its fourth quarter 2020 results and posted another big earnings beat. Earnings were $1.08 versus the Zacks Consensus of just $0.60. That's a beat of 80%.
Revenue was up 128.7% to $617.4 million, due to growth in both Marketplace and Services.
For the full year, revenue was up 110.9% to $1.7 billion, a new record.
Gross Merchandise Sales (GMS) also soared in the quarter and the full year.
In the fourth quarter it was up 117.7% to $3.6 billion from $1.65 billion in the holiday quarter the year before.
For the year, it soared 106.7% to a new record of $10.28 billion from $4.97 billion a year ago.
The company also set records during the "Cyber Five" shopping days from Thanksgiving through Cyber Monday. GMS was up 135% for that period compared to a year ago.
And it isn't all about mask sales anymore.
Although those soared when the pandemic initially hit in the spring of 2020, GMS sales for the Etsy marketplace were still up 118% year-over-year to $3.3 billion in the fourth quarter, even excluding the mask sales.
Mask sales were just 4% of the marketplace's overall GMS in the quarter.
Bullish Outlook on First Quarter 2021
Etsy didn't provide guidance for the full year 2021 but it did give guidance for the first quarter.
It has now been "discovered" by shoppers, thanks to all the mask buying, and they are coming back for more purchases even outside of the masks.
During 2020, Etsy acquired 61 million new and reactivated buyers and saw nearly 160% growth in habitual buyers.
Those higher numbers are reflected in their guidance.
Revenue is expected to be up between 125% and 135% to a range of $513 million to $536 million.
GMS growth is expected to rise 115% to 125% to a range of $2.9 billion to $3.1 billion.
Those are incredible numbers for a non-holiday quarter.
But this big growth could just be the new "norm" for the company.
Analyst Estimates Raise Earnings Estimates
The analysts are buying the bullish story.
9 estimates have been revised higher in the last month for both 2021 and 2022.
The 2021 Zacks Consensus has jumped to $2.77 from $1.96 in the last month. That's earnings growth of just 3%, however, as the company made $2.69 during last year's record year.
But the analysts see further double digit growth again in 2022 with the Zacks Consensus jumping to $3.43 from $2.71 in the prior 30 days. That's growth of 24%.
Too Hot to Handle?
No one doubts the transformation in Etsy's business over the last year. It has gone up to the next echelon in e-commerce.
And if their guidance is any indication, they believe this growth can continue even as the pandemic recedes.
But how much do you pay for the shares?
They are up 414% over the last year but have pulled back during the 2021 growth stock weakness, losing about 40% in recent weeks.
They're still trading with a forward P/E of 72.
But if they continue to fall, could there be a buying opportunity if you believe the growth can continue?
For those who believe that online shopping is here to stay in a big way post-pandemic, Etsy is one to keep on your watch list.
WW International has been both a pandemic winner with its app gaining new subscribers, but also a pandemic loser as its studios have seen restrictions, including closures.
WW (formerly Weight Watchers) is a global wellness company with a leading commercial weight management program.
Through its digital app, it has expert coaches and engages with members in wellness areas focused on food, activity, mindset and sleep.
The company also continues to operate brick-and-mortar studios.
A Beat in the Fourth Quarter
On Feb 25, WW reported its fourth quarter results and beat the Zacks Consensus by $0.06. Earnings were $0.39 versus the consensus of $0.33.
It was the second earnings beat in a row.
At the end of the year, subscribers were up 4% year-over-year to 4.4 million, which was an all-time year-end high.
It's been adding subscribers to its digital app in droves all during 2020 and finished the year up 24% year-over-year to an end of the year high.
Adjusted gross margin, for the full year, rose year-over-year to 58.1%.
It faced numerous headwinds in 2020 due to COVID-19 including its studios being closed, or under other restrictions, in the United States and the UK.
However, the pandemic has forced the company to pivot to digital at a quicker pace than which it was already doing heading into 2020.
Analysts Cut 2021 and 2022 Earnings Estimates
The analysts got too bullish about 2021 even with a vaccine.
The UK has faced further lock downs this year.
As a result, the analysts have been cutting the full year estimates.
6 estimates were cut for 2021 in the last month, pushing the Zacks Consensus down to $1.84 from $2.24.
That's still earnings growth of 8.2%, however, as the company made $1.70 last year.
2 estimates were also cut for 2022 over the same period, which has pushed the Zacks Consensus Estimate down to $2.19 from $2.51.
That's further earnings growth of 19%.
Shares Are Up But Are Still Cheap
Despite the cutting of the full year earnings estimates by analysts, the shares have gained 29% year-to-date.
And they're still cheap, with a forward P/E of just 16.5.
Investors interested in this wellness space, might want to wait on the sidelines on WW until the earnings estimate revisions are going in the right direction.
Additional content: 3 Zacks Rank #1 Growth Stocks
Fed Chair Jerome Powell spoke three times this week! He made comments last week as well when the Committee's statement was released. Each time, he said pretty much the same thing. The economy is bouncing back quicker than expected, but it'll take a long time for it to reach the levels that would necessitate a change in policy. Therefore, these super accommodative days are here to stay for now!
Investors may be worried about rising bond yields and an overheated market... because investors just have to worry about something. But all signs point to an economy that's going to see a lot of growth as the pandemic is brought to its knees and people go back to their normal lives.
Therefore, let's take a look at the
again. Not only does this screen look for strong buys, but it also wants stocks that have at least a 20% historical growth rate and a 20% or more projected growth rate. In other words, we want to see growth yesterday, today and tomorrow. Zacks #1 Rank Growth Stocks
Below are three names that recently passed the test:
Analysts don't usually reward companies that miss quarterly earnings and revenue expectations. But estimates for Rent-A-Center have advanced over the past month despite this lease-to-own giant falling a bit short of forecasts. Actually, estimates have soared in the double digits of late. So what gives?
A strong guidance can cover up a lot of shortcomings. An encouraging outlook (especially in the current environment) is pretty much the best hand a company can have when showing their cards during earnings season.
So analysts really appreciated when RCII forecasted consolidated revenue of $4.305 billion to $4.455 billion for 2021, which would mark a sharp increase from $2.814 billion in 2020. Furthermore, the earnings guidance of between $5 and $5.55 suggests improvement of 41% to 57% over the year-earlier total of $3.53.
It's no wonder the Zacks Consensus Estimate for 2021 has jumped 38% in the past 30 days to $5.30, while next year's forecast is up 42% in that time to $6.25! Earnings are expected to climb nearly 18% in 2022 over 2021.
Even though it missed expectations in the fourth quarter, RCII still saw healthy year-over-year improvements. Earnings per share of $1.03 missed the Zacks Consensus Estimate by only a penny, but improved more than 77% from last year's 58 cents.
Likewise, total revenue of $716.5 million missed expectations but was up 7.3% year-over-year. Revenue actually improved across all its segments. Same-store sales growth in the Rent-A-Center business segment and higher Preferred Lease revenues were the big factors in this growth.
RCII made investments for enhancing its multi-channel platform, which will help them serve customers for the rest of this pandemic and beyond. Like every other successful retailer during these troubles, it has been enhancing its e-commerce and digital offerings.
Furthermore, the company concluded its buyout of Acima Holdings this year, which is a growing, profitable LTO fintech company. RCII believes this acquisition will significantly improve long-term growth and profitability.
Shares of RCII are up more than 45% so far this year and about 380% over the past 12 months.
Sleep Number Corp.
It's kind of weird to think that your mattress might have an IQ, but how else can you explain Sleep Number Corp. surging by more than 450% over the past year? Traditionally speaking, there's not much to a mattress; some springs, a bit of padding and a tag that will send you to prison if you dare remove it.
But SNBR is in a class by itself. The company makes 360® smart beds with their proprietary SleepIQ® technology that supplies adjustable, personalized comfort for each sleeper. You can decide things like the firmness or temperature of your bed. It even saves marriages by providing gentle adjustments to stop your partner from snoring.
SNBR provided the right kind of products at a time when people were doing all they could to make their homes more comfortable. But the company was performing well even before the pandemic. Its fourth-quarter report from February marked the ninth straight quarter with a positive surprise.
Earnings per share of $2.19 in the quarter beat the Zacks Consensus Estimate by more than 43% and improved over 160% year over year. Revenue of $567.9 million topped our expectations by more than 1% and advanced 29% from last year.
The company has been leveraging the power of vertical integration and digitization in this environment. Such moves should help SNBR with profit growth for years to come, long after the pandemic becomes history.
The Zacks Consensus Estimate for this year has soared 40% over the past 60 days to $6.10, while next year has improved 34% in that time to $6.68. Right now, analysts expect profit growth just under 10% for 2022 over 2021.
SNBR is part of the Furniture space, which means its in the top 44% of the Zacks Industry Rank. Shares are up 63% so far in 2021.
With exposure to the smartphone and automotive spaces, it's no wonder why Amkor Technology has been able to beat the Zacks Consensus Estimate for 11 straight quarters. And that's not likely to end when the pandemic does. A new car and a new phone might be just what's needed as we embark on the new normal.
AMKR is one of the largest providers of semiconductor packaging and test services. It packages and tests integrated circuits for chip manufacturers, fabless semiconductor companies and contractor foundries. Its product portfolio is composed of Advanced Products and Mainstream Products.
Shares of AMKR are up 155% over the past year and 39% so far in 2021. As part of the electronics – semiconductors space, the company is in the top 28% of the Zacks Industry Rank.
Last month, AMKR reported fourth-quarter earnings per share of 52 cents, which trounced the year-ago result of 41 cents while beating the Zacks Consensus Estimate by more than 40%. That was actually a rather modest beat for the company, as its four-quarter average surprise was just under 360%.
Revenue of $1.37 billion advanced 16.3% from last year and topped our expectations by 5.5%. Better-than-expected demand for smartphone and automotive products led to this performance, as well as solid cost-control efforts.
For the full year, net sales of $5.05 billion soared 24.6% from the previous year. That's an improvement of nearly $1 billion.
The company expects a good 2021 as 5G deployment, high performance computing, IoT wearables and the automotive space should lead to strong demand for AMKR's services. Revenue in the first quarter is expected to improve 15% from that of 2020.
Earnings estimate revisions are reflecting the company's optimism. The Zacks Consensus Estimate for both this year and next have improved 33% over the past 60 days. The 2021 expectation is now at $1.80, while 2022 is at $2. That suggests a year-over-year improvement of about 11%.
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