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Factors Setting the Tone for Shutterfly's (SFLY) Q2 Earnings

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Shutterfly, Inc. is scheduled to report second-quarter 2018 numbers on Aug 7, after market close.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 23.2%. Moreover, the average trailing four-quarter beat is 14.2%.

Q2 Expectations

The question lingering on investors’ minds is whether Shutterfly will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for second-quarter loss is pegged at 43 cents, narrower than the loss of 44 cents in the year-ago quarter. Of late, the company’s earnings estimates have been stable. Meanwhile, the Zacks Consensus Estimate for revenues stands at $438.3 million, up 109.7% from the prior-year quarter’s actual figure.

Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.

Factors Likely to Influence

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. Meanwhile, its net revenues in second-quarter are likely to be driven by the Lifetouch acquisition. We believe that the buyout will help Shutterfly significantly expand customer base and boost its consumer segment revenues. On the strength of this deal, the company expects to add approximately $780-$790 million to its adjusted revenues and $100 million to its adjusted EBITDA over the first nine months of operations. By 2020, the company targets a minimum $450 million of adjusted EBITDA.

Moreover, continued expansion of the company’s product range is a significant part of Shutterfly’s strategy. The company had earlier launched products in personalized gifts and home décor category. Also, its innovative marketing campaigns are helping to lure new customers and generate a higher number of orders.

Shutterfly, Inc. Price, Consensus and EPS Surprise

Our Model Suggests a Beat

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Shutterfly has an Earnings ESP of 0.00% and a Zacks Rank #3, a combination that suggests that the company is likely to beat estimates.

Key Picks

Here are some restaurant companies to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

SINA Corporation has an Earnings ESP of +3.55% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agilent Technologies, Inc. (A - Free Report) ) has an Earnings ESP of +1.15% and a Zacks Rank of 3.

Acxiom Corporation has an Earnings ESP of +11.11% and a Zacks Rank #3.

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