Is Etsy stock a bargain at its current valuation?
Etsy, Inc. (NASDAQ:ETSY) is own 0.4% to trade at $115.29 today. With the shares dangerously close to their annual bottom of $109.38 tapped on Feb. 24, is it time to take a flier on the e-commerce stock?
Etsy stock is down 47% in 2022 and year-over-year. The shares bounced off the aforementioned lows back in March, but the breakout was contained by their descending 50-day moving average.
Etsy has considerable and consistent top- and bottom-line growth over the past few years. For fiscal 2021, ETSY reported 35% revenue growth and 34% net income growth. Etsy has also managed to increase their revenues and net income 286% and 537%, respectively, since fiscal 2018. This makes their seemingly high valuation appear much more attractive. Etsy stock trades at a forward price-earnings ratio of 30.21 and price-sales ratio of 7.34.
Overall, the biggest downside for those considering investing in the e-commerce company in the short-term is that Etsy's earnings growth rate is expected to slow down considerably for fiscal 2022, with estimates suggesting less than a 1% increase. Nonetheless, Etsy is estimated to end fiscal 2022 with 18.6% revenue growth and further boost their growth rate for fiscal 2023 with 20.2% expected revenue growth and 30.2% expected earnings growth.
Maybe a short-term directional move through options is a route an investor would want to take. In that case, it's also worth noting the equity's Schaeffer's Volatility Scorecard (SVS) sits at 92 out of 100, suggesting ETSY has exceeded options traders' volatility expectations over the past year.