ETSY INC (NYSE:ETSY) Presents a Strong Growth and Technical Setup for Investors

For investors aiming to achieve notable price increases, a mixed method of technical and fundamental analysis can be an effective plan. One technique filters for stocks that display good core business expansion—shown by quickening profits and revenue—while also presenting encouraging chart formations that indicate a possible move upward from a period of limited price movement. This two-part method tries to find companies with sound fundamental operations that are also near the point of achieving favorable market movement. A recent filter for "Strong Growth Stocks with good Technical Setup Ratings" has identified one example: ETSY INC (NYSE:ETSY).

Fundamental Growth Evaluation

The heart of this plan starts with finding a company with a good and lasting expansion path. Based on the fundamental analysis report, Etsy displays an attractive expansion outline. The company receives a ChartMill Growth Rating of 7 out of 10, showing results notably better than its industry competitors in the Broadline Retail sector.

Important expansion measures supporting this rating are:

• Earnings Per Share (EPS) Growth: Etsy has shown notable profit enlargement, with EPS increasing 22.45% over the last year and at a typical yearly pace of 25.54% over recent years.
• Historical Revenue Enlargement: While current revenue expansion has slowed, the company's typical yearly revenue growth over the past several years is a very good 27.97%.
• Future Earnings Forecast: Experts predict this pace to persist, with estimated yearly EPS growth of about 25.26% in the next years.

This steady and forecasted profit expansion is a vital qualitative requirement for an expansion stock, as it implies the company is effectively increasing its activities and keeping importance in its target market of handmade, vintage, and special goods.

Profit and Financial Condition

Good expansion needs to be backed by reliable profit and a steady financial base. A company can enlarge revenue quickly but still lose value if it is not profitable or carries too much debt. Etsy's fundamental report shows a varied but mostly acceptable view here.

The company achieves a firm Profit Rating of 7/10, led by:

• High Return on Invested Capital (ROIC) of 14.18%, which greatly beats 86.7% of its industry and shows effective use of money.
• Firm operating and gross margins that are some of the top in its competitive group.

The Financial Condition Rating is a more average 5/10. The examination shows very good short-term cash availability, with current and quick ratios well above industry norms, indicating no immediate debt payment worries. However, this is balanced by a low Altman-Z score, which points to some extended financial uncertainty that investors should note. For the expansion stock plan, the main point is that the company's high ROIC clearly beats its cost of capital, verifying it is producing real shareholder value through its expansion.

Valuation Background

For expansion investors, price is frequently less important than the expansion pace, but it gives needed background. Etsy's Valuation Rating is a middle 4/10. Its Price-to-Earnings (P/E) ratio of 22.8 matches the wider S&P 500 average. More significantly, when examining measures that include the company's firm cash flow production—like Price/Free Cash Flow and Enterprise Value/EBITDA—Etsy seems inexpensive compared to most of its industry competitors. This implies the market may not be completely valuing the company's expansion and profit, possibly giving a chance if the expansion story continues to develop.

Technical Formation and Upward Move Chance

The fundamental narrative is only one part of the situation. The technical examination aims to find a good entry moment by evaluating market feeling and price behavior. Etsy's technical analysis report shows a stock that has experienced a major price decline but could be forming a foundation for its next action.

Even with a low total technical rating because of unfavorable long and short-term directions, the report notes an attractive "Setup Rating" of 7 out of 10. This finds a particular period of limited price movement:

• The stock price has been moving in a narrow band lately, discovering a floor close to the $54 level and facing a ceiling just above, near $54.74 to $55.16.
• This period of limited movement near a floor, after a previous downward direction, can be seen as a possible base formation. The formation indicates that a clear move above the nearby ceiling area could mark a change in movement and offer a chart-based entry moment.
• The nearness of the 200-day simple moving average just under present prices gives an additional element of possible active support.

This technical background is important for the plan because it tries to match an investor's entry with a time of growing market belief, aiming to benefit from the next upward phase driven by the good fundamental expansion story.

Summary and Further Actions

Etsy offers an example of using a mixed expansion and technical formation plan. Fundamentally, it shows the signs of an expansion stock: firm and forecasted profit enlargement, high returns on capital, and leading margins in its specialty. Technically, it is moving out of a time of low performance and settling at an important level, forming for a possible upward move that could signal the start of a new rising direction.

While the wider market directions are favorable, Etsy's own path will rely on its capacity to speed up revenue expansion again and keep its profit advantage. The technical formation gives a clear structure for handling risk, with defined ceiling levels to observe for an upward move and floor levels that could act as reasonable points for stop-loss instructions.

Interested in examining other stocks that match this model of good fundamentals combined with encouraging chart formations? You can execute the same "Strong Growth Stocks with good Technical Setup Ratings" filter yourself to discover more possible chances here.

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Disclaimer: This article is for information and learning only and does not form a suggestion to purchase, sell, or keep any security. The examination uses data and reports from ChartMill.com. All investment carries risk, including the chance of losing the original amount invested. Investors should perform their own separate research and think about their personal money situation and risk comfort before making any investment choice.