5 Ecommerce Companies that Have Thrived Amidst COVID-19 Closures

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  • As storefronts were being forced to shutter as part of the lock-down that COVID-19 prevention policies required, it accelerated an already rapidly changing shift to online shopping. For example, year-over-year (YOY) online revenue growth through mid-April increased 68%. That is higher than its earlier peak in January at 49%.

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  • As regulators call for a “new normal” going forward under the best of circumstances, it is becoming increasingly clear that the changes we’re seeing in spending patterns may be more permanent than anyone would have imagined in January. That means this paradigm shift of virtual services and online buying will likely be with us for the foreseeable future.

    As an investor, it’s important to figure out who’s likely going to be winners in those “new normal.” There is the obvious example of Amazon.com Inc (AMZN), but what are the real growth opportunities.

    The following is a list of companies that have proven their resilience and likely their role in the “new normal.”

    Ecommerce Company #1: Wayfair Inc (W)

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  • In 2019, the U.S. home category for online sales increased to $39 billion. That’s an increase of $5.1 billion from 2018. Of the $5.1 billion increase, Wayfair estimates that they took home nearly $2 billion of the increase in sales. Not only does it appear that their market share increased, it is an indication that they may take home 38% of additional online spending in this category.

    While Wayfair is currently generating negative non-GAAP EPS, expectations are improving since the last report and revenue projections are significant. Current analyst estimates for 2020 and 2021 revenue growth is 20% and 19.9% respectively. EPS estimates for 2020 have increased from a $9.04 loss to $8.67 in the past 30 days. EPS estimates for 2021 have similarly increased from a loss of $8.08 to $7.02 within the past 60 days. Analyst estimates for their projected 5-year EPS growth is 14%.

    So far, year-to-date the company is up nearly 70%. Since the earnings, the company has pulled back, but in the longer-term, this company may have the best opportunity to shine.

    Ecommerce Company #2: Shopify Inc (SHOP)

    Shopify is a cloud-based shopping cart solution for small and medium-sized businesses. The business owner pays a monthly fee and they’re able to create an online store to sell their products. In their recent earnings report, the company saw a 62% increase in new stores created from March 13, 2020 to April 24, 2020.

    Current analyst estimates for 2020 and 2021 revenue growth is 25.5% and 37.7% respectively. EPS estimates for 2020 have decreased from a $0.14 profit to a $0.09 loss in the past 30 days. EPS estimates for 2021 have similarly decreased from a profit of $0.71 to $0.54. Analyst estimates for their projected 5-year EPS growth is 48.91%.

    So far, year-to-date the company is up over 85%.

    Ecommerce Company #3: Everquote Inc (EVER)

    Everquote is an online marketplace for insurance. If you were ever more inclined to purchase insurance online it is probably now. In the first quarter, EVER delivered 56% revenue growth and variable margin growth of 72%. One of the issues with online shopper is they come to you page and don’t move forward, and you don’t capture their information.  The company saw an 80% increase in quote request volume.

    Current analyst estimates for 2020 and 2021 revenue growth is 28% and 22% respectively. EPS estimates for 2020 and 2021 have remained stable in the past 30 days at a loss of $0.20 and $0.01, respectively. Analyst estimates for their projected 5-year EPS growth is 151.8%.

    So far, year-to-date the company is up over 42%.

    Ecommerce Company #4: Chewy Inc (CHWY)

    Chewy is an ecommerce company that sells pet food, supplies, medications and other pet-related products. With people staying at home and acquiring new animals, it seems like it’s in a good position. The company saw net sales grow 35% and operating margins expand by 3.2%. The net loss of $252.4 million included share-based compensation of $136.2 million.

    Current analyst estimates for 2020 and 2021 revenue growth is 33.6% and 19.1%, respectively. EPS estimates for 2020 have decreased from a $0.48 loss to $0.51 in the past 30 days. EPS estimates for 2021 have increased from a loss of $0.28 to $0.24 within the past 30 days. Analyst estimates for their projected 5-year EPS growth is 132.1%.

    So far, year-to-date the company is up over 32%.

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