What's in Store for Shutterfly (SFLY) This Earnings Season? - Analyst Blog
Shutterfly, Inc. SFLY is set to report second-quarter 2015 results on Jul 29, after the market closes. Last quarter, the online photo-printing service provider posted a positive earnings surprise of 16.54%.
In fact, Shutterfly has delivered positive earnings surprise in the trailing four quarters with an average positive earnings surprise of 9.72%
Let’s see how things are shaping up for this announcement.
Factors to Consider
Shutterfly generally posts losses in the first three quarters and profit in the final quarter of the year because of the seasonal nature of its business.
In the second quarter, the company expects to post loss per share within the 99 cents to $1.02 range as against a loss of 63 cents in the comparable period last year. Higher expenses due to ramping up of its manufacturing facilities are likely to hurt the bottom line in the to-be-reported quarter.
Moreover, the costs related to Shutterfly’s expansion plans could have a negative impact on the profits, as depreciation and equipment costs for expansion and acquisition of manufacturing facilities will increase expenses. Moreover, the company faces stiff competition from major players such as Google Inc. and Facebook, Inc. FB that have been pursuing strategic acquisitions in the technology and Internet space. These companies, commanding better and effective resources to leverage these buyouts, are eating into Shutterfly’s market share.
However, the company’s strategic acquisitions, improved offerings in the growing mobile e-Commerce segment, aggressive promotions, affordable prices and easy-to-use products should boost the top line in the second quarter, in turn aiding the bottom line. The company’s acquisition of GrooveBook – a mobile photo book app subscription service – will substantially increase the customer base.
Earnings Whispers
Our proven model does not conclusively show that Shutterfly will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Shutterfly’s ESP is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of $1.06 per share.
Zacks Rank: Shutterfly’s Zacks Rank #2 (Buy) when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Some stocks in the Internet content and Internet services sector that have both a positive Earnings ESP and favorable Zacks Rank are:
Facebook, with an Earnings ESP of +6.45% and a Zacks Rank #3.
Interxion Holding NV INXN, with an Earnings ESP of +6.67% and a Zacks Rank #3.
Yelp Inc. YELP, with an Earnings ESP of +200.00% and a Zacks Rank #2.
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SHUTTERFLY INC (SFLY): Free Stock Analysis Report
YELP INC (YELP): Free Stock Analysis Report
FACEBOOK INC-A (FB): Free Stock Analysis Report
INTERXION HLDG (INXN): Free Stock Analysis Report
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