Shutterstock (NYSE:SSTK) stock falls 7.4% in past week as one-year earnings and shareholder returns continue downward trend
Taking the occasional loss comes part and parcel with investing on the stock market. And unfortunately for Shutterstock, Inc. (NYSE:SSTK) shareholders, the stock is a lot lower today than it was a year ago. The share price has slid 55% in that time. Longer term investors have fared much better, since the share price is up 19% in three years. Furthermore, it's down 13% in about a quarter. That's not much fun for holders.
If the past week is anything to go by, investor sentiment for Shutterstock isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
Check out our latest analysis for Shutterstock
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Unhappily, Shutterstock had to report a 14% decline in EPS over the last year. This reduction in EPS is not as bad as the 55% share price fall. So it seems the market was too confident about the business, a year ago.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
While the broader market lost about 18% in the twelve months, Shutterstock shareholders did even worse, losing 54% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 5% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Shutterstock better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Shutterstock , and understanding them should be part of your investment process.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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