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Will Shutterstock, Inc.'s (NYSE:SSTK) Earnings Grow In The Years Ahead?

Simply Wall St

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Shutterstock, Inc.'s (NYSE:SSTK) released its most recent earnings update in December 2018, which suggested that the company gained from a major tailwind, more than doubling its earnings from the prior year. Below, I've laid out key growth figures on how market analysts view Shutterstock's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Check out our latest analysis for Shutterstock

Analysts' expectations for next year seems pessimistic, with earnings decreasing by a double-digit -36%. In the next couple of years, earnings are expected to continue to be below today's level, with a decline of -17% in 2021, eventually reaching US$45m in 2022.

NYSE:SSTK Past and Future Earnings, March 27th 2019

While it is informative knowing the growth rate each year relative to today’s figure, it may be more insightful to determine the rate at which the earnings are growing on average every year. The benefit of this approach is that we can get a bigger picture of the direction of Shutterstock's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 11%. This means, we can assume Shutterstock will grow its earnings by 11% every year for the next few years.

Next Steps:

For Shutterstock, there are three key 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 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.
  3. 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 editorial-team@simplywallst.com. 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.