Critical Survey: Etsy (NASDAQ:ETSY) versus Steel Connect (NASDAQ:STCN)

Etsy (NASDAQ:ETSY) and Steel Connect (NASDAQ:STCN) are both retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, institutional ownership, earnings, profitability and dividends.

Profitability

This table compares Etsy and Steel Connect’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Etsy	10.75%	-67.27%	14.60%
Steel Connect	53.00%	19.76%	4.21%

Analyst Recommendations

This is a summary of current recommendations and price targets for Etsy and Steel Connect, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Etsy	4	10	11	0	2.28
Steel Connect	0	0	0	0	N/A

Etsy presently has a consensus target price of $79.92, indicating a potential upside of 31.47%. Given Etsy’s higher probable upside, analysts plainly believe Etsy is more favorable than Steel Connect.

Insider & Institutional Ownership

99.5% of Etsy shares are owned by institutional investors. Comparatively, 47.3% of Steel Connect shares are owned by institutional investors. 2.6% of Etsy shares are owned by company insiders. Comparatively, 8.7% of Steel Connect shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Etsy has a beta of 2.02, indicating that its share price is 102% more volatile than the S&P 500. Comparatively, Steel Connect has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500.

Valuation & Earnings

This table compares Etsy and Steel Connect’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Etsy	$2.75 billion	2.58	$307.57 million	$2.19	27.76
Steel Connect	$189.09 million	0.43	$15.61 million	$3.13	4.12

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

Summary

Etsy beats Steel Connect on 9 of the 13 factors compared between the two stocks.

About Etsy

Etsy, Inc., together with its subsidiaries, operates two-sided online marketplaces that connect buyers and sellers in the United States, the United Kingdom, Germany, Canada, Australia, and France. Its primary marketplace is Etsy.com that connects artisans and entrepreneurs with various consumers. The company also offers Reverb, a musical instrument marketplace; Depop, a fashion resale marketplace; and Elo7, a Brazil-based marketplace for handmade and unique items. In addition, it offers various seller services, including Etsy Payments, a payment processing service; Etsy Ads, an advertising platform; and Shipping Labels, which allows sellers in the United States, Canada, the United Kingdom, Australia, and India to purchase discounted shipping labels. Further, the company provides the Etsy Purchase Protection program that is designed to help buyers; the Etsy Share and Save program for sellers to save on Etsy fees for sales that drive to their Etsy shop from their own channels. Additionally, it offers educational resources comprising blog posts, video tutorials, Etsy Seller Handbook, Etsy.com online forums, and insights; Etsy Teams, a platform to build personal relationships with other Etsy sellers; and a Star Seller program. The company was formerly known as Indieco, Inc changed its name to Etsy, Inc. in June 2006. Etsy, Inc. was founded in 2005 and is headquartered in Brooklyn, New York.

About Steel Connect

Steel Connect, Inc., together with its subsidiaries, provides supply chain services in the United States, Mainland China, Netherlands, and internationally. It offers product configuration and packaging, kitting, and assembly of components and parts into finished goods; and value-added processes, such as product testing, radio frequency identification tagging, product or service activation, language settings, personalization and engraving, multi-channel packaging, and packaging design services. The company provides fulfillment services comprising order management, pick, pack and ship, retail compliance, and demand planning services; and reverse logistics services that simplifies the returns process for retailers and manufacturers, as well as operates a cloud-based e-commerce platform. In addition, it offers warehousing and inventory management services; and software licenses, maintenance, and support services. Further, the company offers its supply chain services to customers in the consumer electronics, communications, computing, medical devices, software, and retail markets. The company was formerly known as ModusLink Global Solutions, Inc. and changed its name to Steel Connect, Inc. in February 2018. Steel Connect, Inc. was incorporated in 1986 and is headquartered in New York, New York.