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What's in Store for Shutterfly (SFLY) this Earnings Season?
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Shutterfly, Inc. is set to report third-quarter 2016 results on Oct 26, after the market closes.
Last quarter, the online photo-printing service provider’s loss was narrower than the Zacks Consensus Estimate, which led to a positive earnings surprise of 27.27%. Moreover, the trailing four-quarter average earnings surprise stands at a positive 5.88%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Shutterfly generally incurs loss in the first three quarters and makes profit in the final quarter of every year because of the seasonal nature of its business. For the third quarter, the company expects loss per share in a range of 90 cents to 97 cents.
Moreover, the costs related to Shutterfly’s expansion plans could have a negative impact on profits as depreciation and equipment costs for expansion and acquisition of manufacturing facilities will increase expenses. The company also continues to invest in additional customer facing enhancements with Shutterfly 3.0 and in the Shutterfly Business Solutions segment, which may further pressurize profits.
Nevertheless, Shutterfly’s strategic acquisitions, improved manufacturing facilities, offerings in the growing mobile e-Commerce segment, aggressive promotions, affordable prices and easy-to-use products are its strong points and should continue to boost results in the quarter.
Further, it is encouraging that the company has posted year-over-year net revenue growth for 62 quarters, consecutively. For the third quarter, net revenue is expected to be in a range of $179.2 million to $185.9 million, a year-over-year increase of 7% to 11.0%.
Gross profit margin is expected within 36.7% to 37.8% of net revenue. Adjusted EBITDA loss is expected in the range of $1 million to $4 million.
Earnings Whispers
Our proven model does not conclusively show that Shutterfly will beat estimates this quarter. This 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 illustrated below.
Zacks ESP: Shutterfly’s Earnings ESP is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 95 cents.
Zacks Rank: Shutterfly’s Zacks Rank #2 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about a positive surprise.
Note that 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.
Stocks to Consider
Here are some companies in the broader computer and technology sector to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Veeco Instruments, Inc. (VECO - Free Report) has an Earnings ESP of +17.86% and a Zacks Rank #1.
Apple, Inc. (AAPL - Free Report) has an Earnings ESP of +1.21% and a Zacks Rank #2.
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What's in Store for Shutterfly (SFLY) this Earnings Season?
Shutterfly, Inc. is set to report third-quarter 2016 results on Oct 26, after the market closes.
Last quarter, the online photo-printing service provider’s loss was narrower than the Zacks Consensus Estimate, which led to a positive earnings surprise of 27.27%. Moreover, the trailing four-quarter average earnings surprise stands at a positive 5.88%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Shutterfly generally incurs loss in the first three quarters and makes profit in the final quarter of every year because of the seasonal nature of its business. For the third quarter, the company expects loss per share in a range of 90 cents to 97 cents.
Moreover, the costs related to Shutterfly’s expansion plans could have a negative impact on profits as depreciation and equipment costs for expansion and acquisition of manufacturing facilities will increase expenses. The company also continues to invest in additional customer facing enhancements with Shutterfly 3.0 and in the Shutterfly Business Solutions segment, which may further pressurize profits.
SHUTTERFLY INC Price and EPS Surprise
SHUTTERFLY INC Price and EPS Surprise | SHUTTERFLY INC Quote
Nevertheless, Shutterfly’s strategic acquisitions, improved manufacturing facilities, offerings in the growing mobile e-Commerce segment, aggressive promotions, affordable prices and easy-to-use products are its strong points and should continue to boost results in the quarter.
Further, it is encouraging that the company has posted year-over-year net revenue growth for 62 quarters, consecutively. For the third quarter, net revenue is expected to be in a range of $179.2 million to $185.9 million, a year-over-year increase of 7% to 11.0%.
Gross profit margin is expected within 36.7% to 37.8% of net revenue. Adjusted EBITDA loss is expected in the range of $1 million to $4 million.
Earnings Whispers
Our proven model does not conclusively show that Shutterfly will beat estimates this quarter. This 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 illustrated below.
Zacks ESP: Shutterfly’s Earnings ESP is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 95 cents.
Zacks Rank: Shutterfly’s Zacks Rank #2 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about a positive surprise.
Note that 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.
Stocks to Consider
Here are some companies in the broader computer and technology sector to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Veeco Instruments, Inc. (VECO - Free Report) has an Earnings ESP of +17.86% and a Zacks Rank #1.
Vocera Communications, Inc. has an Earnings ESP of +10.00% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Apple, Inc. (AAPL - Free Report) has an Earnings ESP of +1.21% and a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>