In December 2018, Shutterstock, Inc. (NYSE:SSTK) announced its most recent earnings update, which suggested that the business experienced a significant tailwind, more than doubling its earnings from the prior year. Below, I’ve laid out key numbers on how market analysts view Shutterstock’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for the upcoming year seems pessimistic, with earnings decreasing by a double-digit -36%. Beyond this, earnings are expected to continue to be below today’s level, with a decline of -17% in 2021, eventually reaching US$45m in 2022.
Even though it is helpful to understand the growth year by year relative to today’s figure, it may be more valuable estimating the rate at which the business is rising or falling every year, on average. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of Shutterstock’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 11%. This means that, we can assume Shutterstock will grow its earnings by 11% every year for the next few years.
For Shutterstock, I’ve put together three key factors you should further examine:
- 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.
- Valuation: What is SSTK 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 SSTK is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SSTK? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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 firstname.lastname@example.org. 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.