3 E-Commerce Stocks Outperforming Amazon in 2021: Chewy, eBay, and Etsy
January 22, 2021 at 09:11 AM EST
Although Amazon (AMZN) is known as the top player in the online retail space, companies such as Chewy (CHWY), eBay (EBAY), and Etsy (ETSY) have outperformed AMZN so far this year. We think that these stocks are strategically positioned to deliver impressive returns this year and beyond based on their unique offerings. So, let’s have a closer look at them.
The world’s largest online retailer, Amazon.com, Inc. (AMZN), has gained significantly amid the COVID-19 pandemic as consumers have had to rely on online platforms for a range of retail consumption needs. The stock has gained 84.8% since hitting its 52-week low of $1626.03 in mid-March. In addition to dominating the cloud segment with Amazon Web Services (AWS), the company has also entered the healthcare market.
However, AMZN is currently facing antitrust allegations by the U.S. government. Also, big tech companies, including AMZN, are likely to have a tougher regulatory time under the Biden administration. This is in-part why the stock has lost 4.2% year-to-date.
Despite challenges specific to AMZN, it is clear that the e-commerce trend is here to stay as consumers grow more comfortable with online shopping. Ongoing and increasing digitization has further accelerated the growth pace of e-commerce companies. According to Grand View Research, the global B2C e-commerce market is expected to grow at a CAGR of 7.9% from 2020 to 2027.
In the online commerce business, companies such as Chewy, Inc. (CHWY), eBay Inc. (EBAY), and Etsy, Inc. (ETSY) are known for their personal touch. So, we believe it is wise to bet on them now in lieu of owning highly priced AMZN.
Chewy, Inc. (CHWY)
Founded in 2010, CHWY is an online seller of branded and private-label pet food and grooming supplies. It offers its products and services through its website and mobile applications. The company’s product offerings by categories include: tablets, chewable tablets, solutions, capsules, injectables, suspensions and ointments. Operating in 15 locations, CHWY seeks to be the most trusted and convenient online destination for pet owners.
For the third quarter ended October 31,the company’s net sales climbed 45% year-over-year to $1.78 billion. Autoship customer sales increased 42.5% year-over-year to $1.23 billion. Its gross profit has increased 55.8% year-over-year to $454.56 million, yielding a gross margin of 25.5%, which has expanded 180 basis points year-over-year. And its active customers have increased 39.8% year-over-year to 17.79 million.
Analysts expect CHWY’s revenue to increase 44.5% for the current quarter ending January 31, 2021, 45.7% in 2021, and 24.9% in 2022. The company’s EPS is expected to increase 39.7% in 2021, 73.7% in 2022, and at a rate of 132.1% per annum over the next five years. CHWY has an impressive earnings surprise history, with the company beating consensus EPS estimates in each of the trailing four quarters.
CHWY retained its customers with its personal touch. It has sent more than 1000 free pet paintings to select customers each week. The company announced on December 4, 2020, that its CEO, Sumit Singh, had been named to Bloomberg Businessweek’s 2020 ‘Bloomberg 50’ List. And last November, CHWY announced that it is expanding its Pharmacy (Rx) business to offer compounded medications that are customized to the specific needs of pets. The stock has gained 16.9% so far this year.
How does CHWY stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
A for Peer Grade
B for Industry Rank
A for Overall POWR Rating
The stock is also ranked #3 of 62 stocks in the Consumer Goods industry.
eBay Inc. (EBAY)
Based in San Jose, California, EBAY is one of the world’s largest and most vibrant marketplaces for great value and unique selections. The global e-commerce company’s portfolio of brands includes eBay Marketplace and eBay Classifieds Group. EBAY’s multi-screen approach offers downloadable applications for iPhone operating systems and android mobile devices that allow access to some of its websites and vertical shopping experiences.
The company’s net revenues have increased more than 25% year-over-year to $2.61 billion for the third quarter ended September 30, 2020. Its annual active buyers increased 5.2% year-over-year to 183 million. Gross merchandise volume (GMV) increased 22.3% year-over-year to $25.05 billion, and non-GAAP net income increased 38.9% year-over-year to $604 million, yielding EPS of $0.85, which has increased 63.5% year-over-year.
Analysts expect the company’s revenue to increase 6.3% for the quarter ending March 31, 2021, and 8.3% in 2021. EBAY’s EPS is expected to increase 25.8% for the quarter ended December 30, 2020, 23.2% for the quarter ending March 31, 2021, and at a rate of 18.1% per annum over the next five years. On a year-to-date basis, the stock has rallied 12.2%.
EBAY announced earlier this month that it has initiated a process to explore, review and evaluate a range of strategic alternatives for its Korea business, and is considering options to maximize value for its shareholders and create future growth opportunities for the business. In November, the company announced an exclusive partnership with Optoro to enable retailers to sell returned and excess inventory seamlessly and in turn provide an influx of high-demand wholesale inventory for its sellers.
EBAY’s POWR Ratings reflect this promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade, and a “B” for Buy & Hold Grade, Peer Grade, and Industry Rank. Among the 69 stocks in the Internet industry, it is ranked #25.
Etsy, Inc. (ETSY)
Operating a marketplace where people around the world connect, both online and offline, to make, sell and buy goods, ETSY is known for its handmade, vintage, and custom gifts. The company’s online marketplaces include Etsy.com and Reverb.com. The Brooklyn-based company aims to “keep commerce human.” Moreover, ETSY was the best performing e-commerce stock in 2020.
The company’s top line has climbed nearly 128% year-over-year to $451.5 million for the third quarter ended September 30, 2020. Driven by greater demand, ETSY sold 24 million masks, which accounted for roughly 11% of its gross merchandise sales (GMS). Its total GMS increased 119.4% year-over-year to $2.6 billion. Net income increased 520% year-over-year to $91.8 million, yielding EPS of $0.70, which increased 483.3% year-over-year.
Analysts expect ETSY’s revenue to increase 88.4% for the quarter ended December 31, 2020, 68.6% for the quarter ending March 31, 2021, and 12% in 2021. The company’s EPS is expected to increase 132% for the quarter ended December 31, 2020, 310% for the quarter ending March 31, 2021, and at a rate of 60.9% per annum over the next five years. ETSY’s earnings surprise history is impressive, with the company missing the consensus estimate in just one of the trailing four quarters.
Ahead of Valentine’s Day, ETSY rounded up the top unique gifting trends on January 12. The company also offered DIY date night to adapt to the new normal. ETSY announced its annual Cyber Week Sales Event on November 12,which continued until December 2. The former eight-day event was extended to 10 days and shoppers with the Etsy app had exclusive, early access to the sales event. The stock has gained 19.5% year-to-date.
ETSY’s strong fundamentals are reflected in its POWR Ratings, it has a “Strong Buy” rating with an “A” in Trade Grade, Buy & Hold Grade, and Peer Grade, and a “B” for Industry Ran
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CHWY shares were trading at $102.15 per share on Friday afternoon, down $2.95 (-2.81%). Year-to-date, CHWY has gained 13.64%, versus a 2.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.3 E-Commerce Stocks Outperforming Amazon in 2021: Chewy, eBay, and Etsy appeared first on StockNews.com