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Shutterstock Breaks Out After Whipping Profit Estimates

Stock (Symbol)

Shutterstock (SSTK)

Stock Price

$79

Sector
Technology
Data is as of
February 11, 2021
Expected to Report
April 26
Company Description
Shutterstock, Inc. (Shutterstock) is a global technology company that operates a two-sided marketplace for professionals to license content. The Company’s library of content includes digital imagery, which consists of licensed photographs, vectors, illustrations and video clips that customers use in their visual communications, such as Websites, digital and print marketing materials, corporate communications, books, publications and video content, and commercial music, which consists of music tracks and sound effects and which is often used to complement digital imagery. It also offers digital asset management services through its cloud-based digital asset management platform (webdam). Its global marketplace brings together users and contributors of content by providing a collection of content its customers can pay to license and incorporate into their work and by compensating contributors as their content is licensed to customers.. Source: Thomson Financial
Sharek’s Take
David SharekShutterstock (SSTK) is rolling in the profits in this new evolving world of digital media. I think the stock is hot, and since the company has whipped profit estimates the past three qtrs, I think the momentum will continue to drive the stock from $80 towards $100 per share.

Shutterstock is a technology platform that provices high-quality images, video clips, and music tracks ecommerce, digital marketing, and enhancing websites. The company sells images, videos, and music clips, with revenue per download of $3.91 last qtr, up from $3.44 a year-ago. What’s working well is subscribers, who pay a subscription for use of unlimited assets instead of per copy. Subscribers numbered 281,000 last qtr, up 45% from 194,000 a year ago. Shutterstock is also excited about some new acquisitions:

  • TurboSquid: a midsize company that helps people develop 3D content. PixelSquid, a product from TurboSquid, allows creators to spin 2D images to create a 3D asset. PixelSquid is avaiable for an unlimited subscription or on a transaction basis. TurboSquid also has a software offering, Kracken, which is used by companies to manage thier libraries of 3D assets.
  • Amber: a small acquisition of key talent and AI technology focused on music content.

Shutterstock has been a publicly traded compani since 2012, so I don’t think the stock will be a high-flyer like some of these other young companies that have run up in price the past year. The company has no debt, a strong cash ballance of $429 million, and is making profits. But the profit picture has been mixed over the years.The stock has a nice Estimated Long-Term Growth Rate of 21% a year and a reasonable P/E of 28. STK aslo has a dividend. Management just upped the dividend 24%, and the stock yields 1%. The company has paid dividends since 2020. Shutterstock will be added to the Growth Portfolio and Aggresive Growth Portfolio.

One Year Chart
This stock is breaking out today — time to buy! With triple-digit profit growth the last three qtrs, and estimates for triple-digit profit growth this qtr, the stock should keep its momentum.

What I really like is the P/E of 28. I think SSTK should have a P/E at least 35. We don’t have to overpay for this stock.

The Est. LTG of 21% is better than I thought it would be. But do note the company hasn’t been a consistent profit-grower throughout the years.

Earnings Table
Last qtr, SSTK delivered 258% profit growth and whipped estimates of 131%. But revenue grew just 9%. The company has been delivering higher profit margins. Last qtr was the third qtr in a row the company has crushed analyst profit estimates.

Annual Profit Estimates for 2021 just got boosted from $2.41 to $2.83 today.

Qtrly profit Estimates are for 112%, 6%, -29% and -40% profit growth the next 4 qtrs. The reason for the poor figures in the upcoming qtrs is the company is going up against tough comparisons in the year-ago periods. Still, SSTK has been whooping profit estimates, so I tend to think that will continue.

Fair Value
My Fair Value P/E is 35, which gives the stock good upside. Since the stock is breaking out after such a big beat, I think it might hit $100 in a short period of time. There’s momentum here in the numbers. I like that we are dealing with rational multiples (P/Es) here.

I’m affraid of some of these stocks that have run way up and don’t have any profits to speak of. 

Bottom Line
Shutterstock (SSTK) hasn’t been a good stock to own for much of the past decade. And for good reason. Look at these profits over the years. 

Perhaps more subscribers will help smooth out profits, like Adobe five years ago. I also like the growth opportunity 3D images provide Shutterstock.

SSTK will be added to the Growth Portfolio and Aggressive Growth Portfolio today. The stock will rank 21st in the Power Rankings.

Power Rankings
Growth Stock Portfolio

21 of 59

Aggressive Growth Portfolio

21 of 24

Conservative Stock Portfolio

N/A

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