It has been about a month since the last earnings report for Shutterfly, Inc. . Shares have added about 5.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Shutterfly Lags Q4 Earnings & Sales Estimates
Shutterfly posted weak fourth-quarter 2016 results wherein both the top and bottom lines missed the respective Zacks Consensus Estimates.
Quarter in Detail
Shutterfly posted earnings of $2.63 per share in the fourth quarter, lagging the Zacks Consensus Estimate of $2.73 per share by 3.7%.Earnings were in line with the company’s expectation of being in the range of $2.57 to $2.86 per share. However, earnings decreased 26.3% from the year-ago figure of $3.57 per share, due to a lower net margin.
Net revenue increased 2% year over year to $561.2 million and fell within the guided range of $557.0 million to $587.0 million. In fact, the fourth-quarter earnings season marked the 64th consecutive quarter of year over year net revenue growth. However, revenues missed the Zacks Consensus Estimate of $586.4 million by 4.3%.
Revenues of the company benefited from the strong performance of the Consumer segment, partially offset by weaker performance at its Tiny Prints, Wedding Paper Diva, MyPublisher and BorrowLenses brands.
Revenues from the Consumers category were up 4% year over year to $521.5 million, backed by mid single-digit growth at the Shutterfly flagship brand. Meanwhile, Shutterfly Business Solutions (‘SBS’) segment revenues decreased 11% to $39.7 million. Excluding one-time SBS’ shipping pass through revenue of $14.0 million in the fourth quarter of 2015, SBS net revenues increased 29% year-over-year.
While the total number of customers was up 1% year over year to 6.2 million, total orders generated were up 6% year over year to 10.9 million. However, average order value was $47.98, down 2% from the year-ago quarter, driven by product mix, promotions and mobile mix.
Gross margin increased 70 basis points (bps) to 59.0%. Conversely, excluding the effect of one-time SBS shipping revenues in the fourth quarter of 2015, gross profit margin decreased 80 bps year over year.
Operating expenses totaled $177.4 million flat year over year, as an increase in technology and development costs were partially offset by a decline in general and administrative expenses.
Adjusted EBITDA (Earnings before interest, tax, depreciation and amortization) was $194.8 million, increasing 7% year over year. However, Adjusted EBITDA was below the low end of the guidance range of $196.3 million to $209.2 million, largely due to weak Shutterfly cards and stationery premium offering performance.
Full Year 2016 Results
In 2016, earnings were $0.45 per share, which compared unfavorably with the Zacks Consensus Estimate of $0.57. However, earnings increased considerably from the prior-year loss of $0.02 per share.
Net revenue increased 7% year over year to $1.13 billion, but was lower than the Zacks Consensus Estimate of $1.16 billion.
1Q17 Earnings Outlook
The personalized products and service provider’s business is highly seasonal and generally incurs losses in the first three quarters of the year. For the first quarter of 2017, the company expects to incur loss per share in the range of $1.00 to $0.95. This loss is wider than Zacks Consensus Estimate of a loss of $0.87 per share.
Net revenue is expected to be in the range of $185.0 million to $190.0 million, a year-over-year decrease in the band of 1.6% to 4.2%.
Gross profit margin is expected within 37.0% to 37.5% of net revenue. Adjusted EBITDA is expected in the range of a loss of $7.0 million to $4.5 million.
2017 Guidance
The company expects earnings of $0.45 to $0.80 per share in 2017. The guidance compares unfavorably with the current Zacks Consensus Estimate of $1.20 per share.
Net revenue is expected in the range of $1.135 billion to $1.165 billion, a year-over-year increase of 0.4% to 3.1%. Adjusted EBITDA is expected in the range of $210.0 to $230.0 million.
Gross profit margin is projected in the range of 49.0% to 50.0% of net revenue.
Structural Changes
Along with the fourth quarter results, Shutterfly announced four areas of strategic focus going forward. To focus resources on these four components of the strategic plan, Shutterfly plans restructuring in 2017, with many changes occurring over the course. As a result of which the company expects to incur restructuring charges over the same time frame ranging from $15 million to $20 million.
One of the main changes is that the company’s workforce will be reduced by approximately 13% or 260 employees, which is expected to result in an annualized cost decrease of approximately $25 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Shutterfly's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.
Image: Bigstock
Why Is Shutterfly (SFLY) Up 5.9% Since the Last Earnings Report?
It has been about a month since the last earnings report for Shutterfly, Inc. . Shares have added about 5.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Shutterfly Lags Q4 Earnings & Sales Estimates
Shutterfly posted weak fourth-quarter 2016 results wherein both the top and bottom lines missed the respective Zacks Consensus Estimates.
Quarter in Detail
Shutterfly posted earnings of $2.63 per share in the fourth quarter, lagging the Zacks Consensus Estimate of $2.73 per share by 3.7%.Earnings were in line with the company’s expectation of being in the range of $2.57 to $2.86 per share. However, earnings decreased 26.3% from the year-ago figure of $3.57 per share, due to a lower net margin.
Net revenue increased 2% year over year to $561.2 million and fell within the guided range of $557.0 million to $587.0 million. In fact, the fourth-quarter earnings season marked the 64th consecutive quarter of year over year net revenue growth. However, revenues missed the Zacks Consensus Estimate of $586.4 million by 4.3%.
Revenues of the company benefited from the strong performance of the Consumer segment, partially offset by weaker performance at its Tiny Prints, Wedding Paper Diva, MyPublisher and BorrowLenses brands.
Revenues from the Consumers category were up 4% year over year to $521.5 million, backed by mid single-digit growth at the Shutterfly flagship brand. Meanwhile, Shutterfly Business Solutions (‘SBS’) segment revenues decreased 11% to $39.7 million. Excluding one-time SBS’ shipping pass through revenue of $14.0 million in the fourth quarter of 2015, SBS net revenues increased 29% year-over-year.
While the total number of customers was up 1% year over year to 6.2 million, total orders generated were up 6% year over year to 10.9 million. However, average order value was $47.98, down 2% from the year-ago quarter, driven by product mix, promotions and mobile mix.
Gross margin increased 70 basis points (bps) to 59.0%. Conversely, excluding the effect of one-time SBS shipping revenues in the fourth quarter of 2015, gross profit margin decreased 80 bps year over year.
Operating expenses totaled $177.4 million flat year over year, as an increase in technology and development costs were partially offset by a decline in general and administrative expenses.
Adjusted EBITDA (Earnings before interest, tax, depreciation and amortization) was $194.8 million, increasing 7% year over year. However, Adjusted EBITDA was below the low end of the guidance range of $196.3 million to $209.2 million, largely due to weak Shutterfly cards and stationery premium offering performance.
Full Year 2016 Results
In 2016, earnings were $0.45 per share, which compared unfavorably with the Zacks Consensus Estimate of $0.57. However, earnings increased considerably from the prior-year loss of $0.02 per share.
Net revenue increased 7% year over year to $1.13 billion, but was lower than the Zacks Consensus Estimate of $1.16 billion.
1Q17 Earnings Outlook
The personalized products and service provider’s business is highly seasonal and generally incurs losses in the first three quarters of the year. For the first quarter of 2017, the company expects to incur loss per share in the range of $1.00 to $0.95. This loss is wider than Zacks Consensus Estimate of a loss of $0.87 per share.
Net revenue is expected to be in the range of $185.0 million to $190.0 million, a year-over-year decrease in the band of 1.6% to 4.2%.
Gross profit margin is expected within 37.0% to 37.5% of net revenue. Adjusted EBITDA is expected in the range of a loss of $7.0 million to $4.5 million.
2017 Guidance
The company expects earnings of $0.45 to $0.80 per share in 2017. The guidance compares unfavorably with the current Zacks Consensus Estimate of $1.20 per share.
Net revenue is expected in the range of $1.135 billion to $1.165 billion, a year-over-year increase of 0.4% to 3.1%. Adjusted EBITDA is expected in the range of $210.0 to $230.0 million.
Gross profit margin is projected in the range of 49.0% to 50.0% of net revenue.
Structural Changes
Along with the fourth quarter results, Shutterfly announced four areas of strategic focus going forward. To focus resources on these four components of the strategic plan, Shutterfly plans restructuring in 2017, with many changes occurring over the course. As a result of which the company expects to incur restructuring charges over the same time frame ranging from $15 million to $20 million.
One of the main changes is that the company’s workforce will be reduced by approximately 13% or 260 employees, which is expected to result in an annualized cost decrease of approximately $25 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Shutterfly, Inc. Price and Consensus
Shutterfly, Inc. Price and Consensus | Shutterfly, Inc. Quote
VGM Scores
At this time, Shutterfly's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.