Shares of digital photograph printing company Shutterstock (SSTK +1.04%) fell 5.5% through 12:05 p.m. ET on Wednesday, after the company reported mixed earnings last night.
Heading into earnings day, analysts had forecast Shutterstock would report $0.67 per share in adjusted profit on $224 million in sales for its fourth quarter of 2023. As it turned out, Shutterstock beat the profits target, reporting a profit of $0.72 per share. Sales, however, came up short at only $217.2 million.
NYSE: SSTK
Key Data Points
Shutterstock Q4 earnings
Q4 sales may have missed expectations, but Shutterstock isn't upset. Putting the numbers in the best light, CEO Paul Hennessy pointed out that the company set new records for both earnings and sales in 2023 and "significantly" exceeded even its own targets for the year. Still, the quarterly report had a decidedly good news/bad news feel to it.
For the year, Shutterstock grew sales 6% in comparison to 2022, to $874.6 million -- but for the quarter, sales declined a fraction of a percent. Shutterstock "beat" on earnings. But even so, operating profits declined 27% for the quarter and 72% for the year.
Rounding out the bad news, Shutterstock exceeded expectations for its non-GAAP (adjusted) earnings, but when calculated according to generally accepted accounting principles (GAAP), the picture isn't quite as clear. Bottom-line profits soared 46% to $3.04 for the year -- but earnings in Q4 in particular not only didn't grow, they actually turned negative, for a loss of $0.03 per share.
Is Shutterstock stock a sell?
So with that sour note -- and considering investors' negative reaction to the news -- the question now is probably whether you should sell Shutterstock today. And the answer is: I don't think so.
2023 may have been a mixed year for Shutterstock, but turning to guidance, the business still appears to be going strong. Management forecasts that sales will hold steady at about $875 million this year, while adjusted earnings per share will slip a bit to a range of $4.15 to $4.30. True, that's a bit less than the $4.35 per share that Shutterstock earned in 2023. But even so, it leaves the stock trading for no more than 10 times both trailing and forward earnings. That hardly seems expensive, especially considering management guidance that it will average 10% revenue growth (and improving profit margins) through 2027, and especially considering that Shutterstock pays a generous 2.7% dividend yield.
While today's decline in share price is discouraging, Shutterstock still looks like a decent dividend value stock to me.
