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

Zacks Equity Research

Etsy, Inc. ETSY is scheduled to report first-quarter 2019 results on May 6.

For first-quarter 2020, the Zacks Consensus Estimate for sales is currently pegged at $219.06 million, indicating an improvement of 29.4% from the prior-year period.

Further, the Zacks Consensus Estimate for earnings stands at 18 cents per share, which suggests a decline of 25% from the year-ago reported figure.

Over the trailing four quarters, the company’s earnings surpassed the Zacks Consensus Estimate on two occasions and reported in line on the other two. It has a trailing four-quarter positive earnings surprise of 29.6%, on average.

Etsy, Inc. Price and EPS Surprise


Etsy, Inc. Price and EPS Surprise

Etsy, Inc. price-eps-surprise | Etsy, Inc. Quote

Factors at Play

Etsy’s sales are expected to have marginally improved on a year-over-year basis owing to growth in online consumer spending on essentials like hand sanitizer and bathroom tissue. Also, categories like self care, puzzles and games to do at home witnessed strong demand during the quarter, which are likely to have aided the company to generate strong top-line numbers.

Moreover, strong efforts toward enhancing product offerings in order to deliver enhanced customer experience and solid execution of key growth initiatives such as search and discovery, customer liability, marketing, and seller tools and services are expected to have benefited the company in the first quarter.

Moreover, its two-sided marketplace and expanding collection of unique items are likely to reflect on first-quarter results.

Etsy capitalizes on human connections, which are likely to have strengthened buyer engagement on its platform during the to-be-reported quarter.

The company’ search and discovery platform remained a key catalyst. Strengthening search capabilities and upgraded context specific search ranking algorithms are anticipated to have aided it to deliver enhanced shopping experience in the quarter under review. This, in turn, is expected to have boosted Etsy’s first-quarter performance.

Additionally, the company’s improving mobile app is expected to have aided it in gaining traction among customers in the first quarter.

Etsy’s increasing strategic investments, seller shipping promotions, performance marketing budget and strengthening customer services are anticipated to reflect on first-quarter results.

Further, the company’s strengthening tools designed for sellers are likely to have expanded the seller base on its platform during the to-be-reported quarter. The introduction of variation photos, which help buyers to find the right item according to their preference, is expected to have benefited the conversion rate of sellers during the first quarter.

However, the coronavirus pandemic slowed down sales in certain categories like wedding and jewelry, which might have impacted the top line in the to-be-reported quarter.

Also, increasing cloud spending is likely to have affected first-quarter earnings. Further, the company’s creative campaigns are expected to have accelerated marketing expenses in the quarter.

Earnings Whispers

Our proven model predicts an earnings beat for Etsy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is the case here as you will see below.

Earnings ESP: The company has an Earnings ESP of +8.17%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Etsy has a Zacks Rank #2.

Other Stocks That Warrant a Look

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

Ericsson ERIC has an Earnings ESP of +25.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Baidu, Inc. BIDU has an Earnings ESP of +10.27% and a Zacks Rank of 2.

Inphi Corporation IPHI has an Earnings ESP of +20.04% and a Zacks Rank #2.

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