Etsy, Inc. (NASDAQ:ETSY): Commentary On Fundamentals

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I’ve been keeping an eye on Etsy, Inc. (NASDAQ:ETSY) because I’m attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe ETSY has a lot to offer. Basically, it is a financially-sound company with an impressive track record and a excellent growth outlook. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my broad commentary, take a look at the report on Etsy here.

High growth potential with proven track record

ETSY is an attractive stock for growth-seeking investors, with an expected earnings growth of 29% in the upcoming year. Earnings growth is paired with an eye-catching top-line trajectory of 57%, which indicates a high-quality bottom-line expansion, as opposed to those driven simple by unsustainable cost-cutting activities. Over the past few years, ETSY has demonstrated a proven ability to generate robust returns of 23%. Unsurprisingly, ETSY surpassed the Online Retail industry return of 12%, which gives us more confidence of the company’s capacity to drive earnings going forward.

NasdaqGS:ETSY Past and Future Earnings, July 15th 2019
NasdaqGS:ETSY Past and Future Earnings, July 15th 2019

ETSY’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. ETSY’s has produced operating cash levels of 0.58x total debt over the past year, which implies that ETSY’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.

NasdaqGS:ETSY Historical Debt, July 15th 2019
NasdaqGS:ETSY Historical Debt, July 15th 2019

Next Steps:

For Etsy, I’ve put together three essential factors you should further research:

  1. 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.
  2. Dividend Income vs Capital Gains: Does ETSY return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from ETSY as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ETSY? Explore our interactive list of stocks with large 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.