Etsy (ETSY) versus Alliance Data Systems (ADS) Financial Review

Etsy (NASDAQ:ETSY) and Alliance Data Systems (NYSE:ADS) are both computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, earnings, risk, dividends, analyst recommendations, institutional ownership and valuation.

Dividends

Alliance Data Systems pays an annual dividend of $2.28 per share and has a dividend yield of 1.1%. Etsy does not pay a dividend. Alliance Data Systems pays out 12.5% of its earnings in the form of a dividend.

Insider and Institutional Ownership

86.8% of Etsy shares are owned by institutional investors. Comparatively, 93.7% of Alliance Data Systems shares are owned by institutional investors. 2.8% of Etsy shares are owned by company insiders. Comparatively, 2.6% of Alliance Data Systems shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Etsy and Alliance Data Systems’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Etsy $441.23 million 11.26 $81.80 million $0.38 109.18
Alliance Data Systems $7.72 billion 1.54 $788.70 million $18.28 11.83

Alliance Data Systems has higher revenue and earnings than Etsy. Alliance Data Systems is trading at a lower price-to-earnings ratio than Etsy, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Etsy has a beta of 0.23, suggesting that its stock price is 77% less volatile than the S&P 500. Comparatively, Alliance Data Systems has a beta of 1.76, suggesting that its stock price is 76% more volatile than the S&P 500.

Profitability

This table compares Etsy and Alliance Data Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Etsy 17.52% 13.23% 6.81%
Alliance Data Systems 12.11% 56.33% 3.92%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Etsy and Alliance Data Systems, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Etsy 1 4 6 0 2.45
Alliance Data Systems 1 6 13 0 2.60

Etsy presently has a consensus target price of $44.68, suggesting a potential upside of 7.69%. Alliance Data Systems has a consensus target price of $263.00, suggesting a potential upside of 21.66%. Given Alliance Data Systems’ stronger consensus rating and higher possible upside, analysts plainly believe Alliance Data Systems is more favorable than Etsy.

Summary

Alliance Data Systems beats Etsy on 10 of the 16 factors compared between the two stocks.

About Etsy

Etsy, Inc. operates Etsy.com, a commerce platform to make, sell, and buy goods online and offline primarily in the United States, United Kingdom, Canada, Australia, France, and Germany. It provides various seller services and tools that are designed to help entrepreneurs for starting, managing, and scaling their businesses. The company offers approximately 50 million items across approximately 50 retail categories to buyers. It also provides various seller services, including Etsy payments, a payment processing service; promoted listings, an on-site advertising service that allows sellers to pay for prominent placement of their listings in search results; shipping labels, which allows sellers in the United States and Canada to purchase discounted shipping labels; and pattern, a service that allows sellers to build custom Websites, as well as offers seller tools and education resources to manage the administrative side of their businesses. Etsy, Inc. was founded in 2005 and is headquartered in Brooklyn, New York.

About Alliance Data Systems

Alliance Data Systems Corporation provides data-driven marketing and loyalty solutions worldwide. It operates through three segments: LoyaltyOne, Epsilon, and Card Services. The company offers a portfolio of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, end-to-end marketing services, analytics and creative services, direct marketing services, and private label and co-brand retail credit card programs. It also focuses on facilitating and managing interactions between its clients and their customers through various consumer marketing channels, including in-store, online, email, social media, mobile, direct mail, and telephone. The company captures and analyzes data created during each customer interaction, leveraging the insight derived from that data to enable clients to identify and acquire new customers and to enhance customer loyalty. It serves clients across various end-markets, including financial services, specialty retail, grocery and drugstore chains, petroleum retail, automotive, hospitality and travel, telecommunications, insurance, and healthcare. Alliance Data Systems Corporation was founded in 1996 and is headquartered in Plano, Texas.

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