Earnings Miss: Shutterstock, Inc. Missed EPS By 660% And Analysts Are Revising Their Forecasts

The third-quarter results for Shutterstock, Inc. (NYSE:SSTK) were released last week, making it a good time to revisit its performance. Although revenues of US$159m were in line with analyst expectations, Shutterstock surprised on the earnings front, with an unexpected profit of US$0.14 per share a nice improvement on the losses that analysts forecast. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we collected the latest post-earnings consensus estimates to see what could be in store for next year.

Check out our latest analysis for Shutterstock

NYSE:SSTK Past and Future Earnings, November 8th 2019
NYSE:SSTK Past and Future Earnings, November 8th 2019

Taking into account the latest results, the current consensus from Shutterstock’s three analysts is for revenues of US$691m in 2020, which would reflect a modest 6.9% increase on its sales over the past 12 months. Earnings per share are expected to plunge 36% to US$0.56 in the same period. Before this earnings report, analysts had been forecasting revenues of US$702m and earnings per share (EPS) of US$0.50 in 2020. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the decent improvement in earnings per share expectations following these results.

The consensus price target rose 6.1% to US$34.67, suggesting that higher earnings estimates flow through to the stock’s valuation as well. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Shutterstock at US$38.00 per share, while the most bearish prices it at US$30.00. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or that analysts have a clear view on its prospects.

Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It’s pretty clear that analysts expect Shutterstock’s revenue growth will slow down substantially, with revenues next year expected to grow 6.9%, compared to a historical growth rate of 14% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 17% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts are also expecting Shutterstock to grow slower than the wider market.

The Bottom Line

The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Shutterstock following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Shutterstock’s revenues are expected to perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates – from multiple Shutterstock analysts – going out to 2023, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.