Shutterstock (SSTK) is a technology company that provides quality content and creative workflow solutions internationally. The stock has lost 24.75% over the past month and is currently trading more than 50% below its 52-week high of $128.36, which it hit on October 26, 2021.
SSTK reported mixed first-quarter results. While revenue for the quarter missed the consensus estimate by 1.3%, adjusted EPS beat the Street estimate by 16.3%. The company’s Board of Directors declared a dividend of $0.24 per share of outstanding common stock, payable on June 16, 2022. Also, it recently acquired Pond5 to expand the distribution of its content. So, the stock’s near-term prospects look bright.
Here’s what I think could influence SSTK’s performance in the upcoming months:
Robust Financials
SSTK’s revenue increased 9% year-over-year to $199.10 million in the first quarter, which ended March 31, 2022. Its total liabilities came in at $351.55 million for the period ended March 31, 2022, compared to $383.23 million for the period ended December 31, 2021, while its adjusted net income came in at $37.18 million, representing a 1.5% year-over-year increase. Also, its adjusted EPS came in at $1, up 2% year-over-year.
Favorable Analyst Estimates
For the quarter ending September 30, 2022, analysts expect SSTK’s EPS to increase 24.3% year-over-year to $0.87. Also, its revenue is expected to increase 16.6% year-over-year to $209.25 million for the current quarter ending June 30, 2022. In addition, its EPS is expected to grow at 7.5% per annum over the next five years. Moreover, Wall Street analysts expect the stock to hit $106 in the near term, indicating a potential upside of 81.7%.
High Profitability
In terms of trailing-12-month levered FCF margin, SSTK’s 14.62% is 290.1% higher than the industry average of 3.75%. Likewise, its trailing-12-month CAPEX/Sales of 7.98% is 181.7% higher than the industry average of 2.83%. Moreover, the stock’s trailing-12-month ROTC and ROTA of 13.45% and 11.17% are higher than the industry averages of 7.43% and 6.06%, respectively.
POWR Ratings Show Promise
SSTK has an overall rating of B, which equates to a Buy in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight different categories. Out of these categories, SSTK has a B grade for Quality, in sync with its higher-than-industry profitability ratios.
Beyond what I have stated above, we have also given SSTK grades for Value, Growth, Momentum, Stability, and Sentiment. Get all the SSTK ratings here.
SSTK is ranked #3 out of 33 stocks in the Internet - Services industry.
Bottom Line
SSTK is making several positive developments by integrating strategic solutions and acquisitions. So, it could be wise to buy the dip in the stock.
Note that SSTK is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
How Does Shutterstock, Inc. (SSTK) Stack Up Against its Peers?
SSTK has an overall POWR Rating of B. You could also check out these other stocks within the Internet - Services industry with an A (Strong Buy) or B (Buy) rating: Liquidity Services, Inc. (LQDT) and Perion Network Ltd. (PERI).
SSTK shares were unchanged in after-hours trading Monday. Year-to-date, SSTK has declined -47.21%, versus a -16.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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