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A Look at Etsy’s Valuations before Its 4Q17 Results

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Forward PE

On January 24, 2018, Etsy (ETSY) was trading at a 12-month forward PE (price-to-earnings) ratio of 66.6x. Following its 3Q17 results, its valuation multiple has increased 8.6%.

The company is trading at a higher valuation multiple than its larger peers. eBay (EBAY) and Alibaba (BABA) were trading at 12-month forward PE ratios of 17.9x and 29.7x, respectively, on January 24.

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Analysts’ growth estimates

Analysts expect Etsy’s fiscal 2017 revenues to be $437.7 million, up 19.9%. Its earnings per share (or EPS) are expected to be $0.40 compared its EPS of -$0.26 in fiscal 2016. The company’s fiscal 2018 revenues are projected to be up 18.7% to $519.3 million, but its EPS could fall 29.0% to $0.29.

Foreign exchange volatility and rising costs (moving data to the cloud from datacenters) are still concerns for Etsy. These unfavorable factors could nullify the benefits of cost savings achieved in other areas such as headcount reduction.

Peer comparison

In comparison, analysts expect Alibaba’s (BABA) fiscal 2018 revenues to rise 53.4% to $242.8 billion, and its earnings per share are projected to be $33.64, up 43.5%. For fiscal 2019, analysts expect Alibaba’s revenues to increase 37.2% to $333.1 billion. Its earnings are projected to increase 30.1% to $43.77 per share.

Analysts estimate eBay’s (EBAY) fiscal 2017 revenues to increase 6.6% to $9.6 billion while its earnings per share are expected to rise 6.7% to $2.01. The company’s fiscal 2018 revenues are projected to rise 7.4% to $10.3 billion, and its EPS could increase ~11.0% to $2.23.

In the final article in this series, we’ll see what analysts have to say about Etsy.

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