Comparing Etsy (NASDAQ:ETSY) & Groupon (NASDAQ:GRPN)

Groupon (NASDAQ:GRPN) and Etsy (NASDAQ:ETSY) are both retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, profitability, analyst recommendations and valuation.

Insider and Institutional Ownership

90.1% of Groupon shares are held by institutional investors. Comparatively, 99.5% of Etsy shares are held by institutional investors. 35.7% of Groupon shares are held by insiders. Comparatively, 2.8% of Etsy shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

Groupon has a beta of -0.01, suggesting that its share price is 101% less volatile than the S&P 500. Comparatively, Etsy has a beta of 1.77, suggesting that its share price is 77% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Groupon	-28.52%	-717.37%	-22.78%
Etsy	5.78%	-31.10%	11.14%

Valuation & Earnings

This table compares Groupon and Etsy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Groupon	$492.56 million	1.01	-$59.03 million	($3.49)	-3.48
Etsy	$2.85 billion	1.81	$303.28 million	$1.31	39.90

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

Analyst Ratings

This is a breakdown of current recommendations for Groupon and Etsy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Groupon	2	1	3	0	2.17
Etsy	3	18	8	1	2.23

Groupon currently has a consensus target price of $31.25, indicating a potential upside of 156.99%. Etsy has a consensus target price of $61.12, indicating a potential upside of 16.93%. Given Groupon’s higher probable upside, research analysts plainly believe Groupon is more favorable than Etsy.

Summary

Etsy beats Groupon on 13 of the 15 factors compared between the two stocks.

About Groupon

Groupon, Inc., together with its subsidiaries, operates a marketplace that connects consumers to merchants. It operates in two segments, North America and International. The company sells goods or services on behalf of third-party merchants. It serves customers through its mobile applications and websites. The company was formerly known as ThePoint.com, Inc. and changed its name to Groupon, Inc. in October 2008. Groupon, Inc. was incorporated in 2008 and is headquartered in Chicago, Illinois.

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.