Etsy Inc. scores 72 for management and 43 for moat. The management score rests on a return on invested capital of 11.5% and a gross margin of 71.6% — figures that describe a business earning a respectable return on what it employs. Shareholder equity is negative, so the debt-to-equity figure is not meaningful here — usually the mark of heavy buybacks rather than distress, but worth checking. A moderate moat alongside strong management is a combination worth understanding before the price matters at all.
Three independent anchors set the price worth paying. Growth is modelled at 10.8% a year, below the 11.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 21.6x. That produces an intrinsic value of $27.32, a 10-CAP price of $52.42 and a payback time price of $68.43, with the value zone set at the highest of the three, $68.43. Today's price of $72.84 sits 6% above it.
The price is above the value zone and the business scores 43 for moat and 72 for management. Neither test argues for paying up here.
| Price | $72.84 |
| Market cap | $6.9B |
| P/E ratio | 39.8x |
| Return on invested capital | 11.5% |
| Gross margin | 71.6% |
| Debt to equity | -2.80x |
| Free cash flow yield | 11.7% |
| Growth rate used | 10.8% |
| Growth rate measured | 11.0% |
| Exit multiple assumed | 21.6x |
| Company | Moat | Buy price |
| Warby Parker Inc-Class A (WRBY) | 73 | $5.50 |
| Dick's Sporting Goods Inc (DKS) | 67 | $100.64 |
| Five Below (FIVE) | 94 | $187.96 |
| Tractor Supply (TSCO) | 77 | $13.09 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Etsy Inc. rather than accepting ours.