U.S. Markets closed

Etsy, Inc. (NASDAQ:ETSY): Will The Growth Last?

Simply Wall St

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

In March 2019, Etsy, Inc. (NASDAQ:ETSY) released its earnings update. Generally, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 15% next year compared with the higher past 5-year average growth rate of 62%. With trailing-twelve-month net income at current levels of US$77m, we should see this rise to US$89m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Etsy

How will Etsy perform in the near future?

The longer term view from the 13 analysts covering ETSY is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NasdaqGS:ETSY Past and Future Earnings, July 16th 2019

By 2022, ETSY's earnings should reach US$166m, from current levels of US$77m, resulting in an annual growth rate of 29%. This leads to an EPS of $1.53 in the final year of projections relative to the current EPS of $0.64. In 2022, ETSY's profit margin will have expanded from 13% to 14%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Etsy, there are three important factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Etsy worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Etsy is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Etsy? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.