Etsy Inc., through its marketplace, enable people to connect, both online and offline, to make, sell and buy handmade and vintage items, art, and supplies, as well as regular items such as clothing, housewares, paper goods, candles, bags and purses, music, and wood-working items. The company was founded in 2005 and is based in Brooklyn, New York.
ETSY Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for ETSY, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Etsy Inc ranked in the 87th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 914% on a DCF basis. In terms of the factors that were most noteworthy in this DCF analysis for ETSY, they are:
The compound growth rate in the free cash flow of Etsy Inc over the past 4.67 years is 1.41%; that's better than 90.27% of cash flow producing equities in the Technology sector, where it is classified.
The business' balance sheet reveals debt to be 4% of the company's capital (with equity being the remaining amount). Approximately only 14.5% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
ETSY's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 46.07% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
AMD, ARW, FN, INSE, and CLS can be thought of as valuation peers to ETSY, in the sense that they are in the Technology sector and have a similar price forecast based on DCF valuation.
Madison Investments, an independent employee-owned investment firm, published its third-quarter Madison Small Cap Fund letter – a copy of which can be downloaded here. A positive return of 6.97% was recorded by the fund for the 3rd Quarter of 2020, ahead of its Russell 2000 benchmark that returned 4.93%. You can view the fund’s top […]