Advertisement
New Zealand markets closed

  • NZX 50

    11,836.04
    -39.31 (-0.33%)
     

  • NZD/USD

    0.5926
    +0.0007 (+0.11%)
     

  • ALL ORDS

    7,898.90
    +37.90 (+0.48%)
     

  • OIL

    81.88
    -0.81 (-0.98%)
     

  • GOLD

    2,396.80
    +8.40 (+0.35%)
     

Shutterfly Defies Industry Trend, Stock Up 118% in 6 Months

Zacks Equity Research
Updated
Abbott (ABT) Up 3.8% Since Last Earnings Report: Can It Continue?
Abbott (ABT) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

The past six months have not been quite encouraging for Internet-Content industry. However, Shutterfly, Inc. SFLY from the same industry has managed to look past the adversities. In the past six months, the industry has declined 7.5% against the S&P 500’s gain of 4.3%. This sluggish performance was somewhat mitigated by Shutterfly’s exceptional run in the bourses. Shares of the company have rallied 117.8% in the same time frame. Let’s find out the factors behind the stock’s upsurge.

Impressive Quarterly Results

Shutterfly’s shares witnessed a sharp gain after the company reported better-than-expected results in first-quarter 2018. While the bottom line came ahead of the Zacks Consensus Estimate for the fifth straight quarter, the top line surpassed the same for the third consecutive quarter. In fact, the first-quarter earnings season marked the 69th consecutive quarter of year-over-year net revenue growth. This improvement can be attributed to organic growth and robust performance of the Shutterfly Business Solutions (SBS) segment.

Major Restructuring

In the fourth quarter of 2017, this Zacks Rank #1 (Strong Buy) company has completed restructuring activities. Also, Shutterfly closed many of its brands in order to focus more on profitable and cost-effective brands. In June 2017, Tiny Prints — the company’s second largest consumer brand — was shut down, after shifting Tiny Prints’ customers to Shutterfly.com. Notably, Shutterfly has created a Tiny Prints boutique on a dedicated tab on Shutterfly.com. BorrowLenses was also put under a strategic review and ultimately the company decided to retain and operate this business. This is because it is growing at a modest growth rate and generates positive cash flow. The company had also announced its plan to focus on the new Shutterfly Wedding Store as a part of its wedding strategy, which includes a premium Wedding Paper Divas-branded stationery collection.

 

ADVERTISEMENT

Lifetouch Acquisition, a Major Catalyst

On Jan 30, 2018, Shutterfly stated that it has signed a contract to acquire Lifetouch — a privately held online photography company — for $825 million cash. The deal closed on Apr 2, 2018. We believe that the buyout will help Shutterfly expand customer base and boost its consumer segment revenues significantly. It will also prove accretive to the company’s profitability by adding approximately $780-$790 million to its adjusted revenues and $100 million to its adjusted EBITDA over the first nine months of operations. By 2020, Shutterfly targets a minimum $450 million of adjusted EBITDA.

In 2018, the company expects overall profitability to witness an uptrend owing to the acquisition of Lifetouch. Additionally, adjusted earnings are anticipated in the range of $2.83-$3.28 per share, up from the prior guided range of $1.94-$2.38. Net revenues are projected between $2.01 billion and $2.06 billion compared with $1.22 billion and $1.26 billion, anticipated earlier.

Other Stocks to Consider

Some other stocks worth considering from the same space include Global Eagle Entertainment Inc. ENT, TechTarget, Inc. TTGT and XO Group Inc. XOXO. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Global Eagle Entertainment have gained nearly 26% in the past three months.

TechTarget has an impressive long-term earnings growth rate of 20%.

XO Group’s earnings surpassed the Zacks Consensus Estimate in each of the trailing three quarters.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >> 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Shutterfly, Inc. (SFLY) : Free Stock Analysis Report
 
XO Group, Inc. (XOXO) : Free Stock Analysis Report
 
Global Eagle Entertainment Inc. (ENT) : Free Stock Analysis Report
 
TechTarget, Inc. (TTGT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research