Shutterfly, Inc. (SFLY - Free Report) is scheduled to report third-quarter 2017 numbers on Oct 24, after market close.
Generally, the company 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. Therefore, Shutterflyexpects to witness loss per share in the range of 80-76 centsin the to-be-reported quarter. Net revenue is projected to be in the band of $187-$193 million, representing a year-over-year growth of (0.2%) to 5.3%.
Markedly, the Zacks Consensus Estimate of a loss of 77 cents falls within the guided range. This also reflects a year-over-year improvement of 10.2%. Also, the Zacks Consensus Estimate for third-quarter revenues is pegged at $192.6 million, reflecting an increase of 2.8% year over year.
Shutterfly’s improved offerings in the growing mobile e-Commerce segment, aggressive promotions and easy-to-use products, should continue to boost results in the to-be-reported quarter.
Moreover, continuous expansion of its range of products is a key element of the company’s strategy that is likely to boost sales. In fact, its Shutterfly 3.0 initiative, under which the company aims to create a platform and device-agnostic memory management as well as personalized e-commerce solution, might further drive the quarter’s performance.
However, revenue growth in the company’s flagship Shutterfly brand has been partially offset by weaker performances at the non-Shutterfy brands over the past few quarters. The trend could continue into the to-be-reported quarter as well, pressurizing revenue growth.
As announced in fourth-quarter 2016, Shutterfly has undertaken various structural changes. In order to focus more on profitable and cost-effective brands, the company plans to retire many of its other brands.
Meanwhile, the company is focusing on reducing its workforce by about 13%, thereby reducing costs considerably as part of the restructuring. The remaining 50% of the same were expected to be completed in the third quarter of 2017, bringing down the quarter’s expenses to a large degree.
In sync with the structural changes, the first three quarters of 2017 are however expected to be a transitioning period for the company. In fact, restructuring charges ranging from $15-$17.5 million are expected to be incurred in the period. Notably, by the end of second-quarter 2017, about $13.7 million of the expenses had been recorded. The remaining of these could pressurize margins in the to-be-reported quarter.
Moreover, higher costs associated with strategic initiatives to increase its production capacity may also somewhat hamper the quarter’s profits while unfavorable travel industry and consumer spending trends might limit revenue growth.
Taking into account all these factors, our quantitative model suggests to steer clear of Shutterfly due to its Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%. Per the model, only a positive Earnings ESP combined with a Zacks Rank #3 (Hold) or better increase the odds for an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Shutterfly, Inc. Price and EPS Surprise
Stocks to Consider
Here are some companies in the Zacks Computer & Technology sector that investors may consider as our model shows that they have the right combination of elements to post earnings beat this quarter.
Sonus Networks, Inc. (SONS - Free Report) has an Earnings ESP of +16.28% and a Zacks Rank #1 (Strong Buy).
MKS Instruments, Inc. (MKSI - Free Report) has an Earnings ESP of +2.74% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
MSCI Inc. (MSCI - Free Report) has an Earnings ESP of +3.82% and a Zacks Rank #2 (Buy).
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