Shutterstock, Inc. (NYSE:SSTK): Earnings Growth Remains Elusive

Based on Shutterstock, Inc.’s (NYSE:SSTK) earnings update in September 2018, analyst consensus outlook appear bearish, with earnings expected to decline by -4.9% in the upcoming year compared with the past 5-year average growth rate of 5.7%. With trailing-twelve-month net income at current levels of US$17m, the consensus growth rate suggests that earnings will decline to US$16m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

View our latest analysis for Shutterstock

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Can we expect Shutterstock to keep growing?

The 5 analysts covering SSTK view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of SSTK’s earnings growth over these next few years.

NYSE:SSTK Future Profit January 30th 19
NYSE:SSTK Future Profit January 30th 19

This results in an annual growth rate of 15% based on the most recent earnings level of US$17m to the final forecast of US$24m by 2022. EPS reaches $1.68 in the final year of forecast compared to the current $0.48 EPS today. In 2022, SSTK’s profit margin will have expanded from 3.0% to 3.3%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Shutterstock, I’ve put together three essential aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Shutterstock worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Shutterstock is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Shutterstock? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.