Leave it to Shutterfly (NASDAQ:SFLY) to look pretty in its quarterly snapshot. The digital photography pioneer came through with a strong finish to 2006 thanks to last night's fourth-quarter report.

It was a blowout period. Revenues soared 60% higher to $65.7 million. Net income, after backing out a favorable tax benefit a year earlier, shot up by 65% to hit $12.2 million. That breaks down to $0.50 on a per-share basis. Analysts were looking for $0.38 a share in profits.

It was a perfect holiday showing for Shutterfly. Orders were up 45% for the period, and the average order clocked in 10% higher. Revenues and orders actually accelerated throughout the year.

Vindication? It's time for your close-up.

The company went public five months ago. However, it has traded above its $15 IPO price just once since mid-December. Yesterday's report is the kind of showing that should win it the respect that the online photo-finishing giant deserves.

Digital photography is a pretty misunderstood space. In a niche that was initially the domain of companies such as Hewlett-Packard (NYSE:HPQ) and Kodak (NYSE:EK) that had more conventional photo printing to defend, Shutterfly has earned its keep through innovation and a trusted interface. Fess up -- did you get any Shutterfly holiday cards this year? I know I did.

Shutterfly has been profitable since 2003, and the future is even brighter. The company sees revenues inching 30% to 34% higher in 2007 on fat EBITDA margins. With nearly $5 a share in cash, are you sure you want to bet against Shutterfly?

A lot of you have. Over at Motley Fool CAPS, most of your fellow Fools with an opinion on Shutterfly expect it to underperform the market. What are they saying?

  • There's no moat!
  • Cheap photo-finishers like the ones at Wal-Mart (NYSE:WMT) and CVS (NYSE:CVS) abound!
  • The industry has been commoditized!

Some of the concerns are valid, but Shutterfly has become the trusted name in customized photo-based gifts and greeting cards. This is a seasonal business. The next few quarters will be sleepy. Just don't make the mistake of betting against this company when the 2007 holiday season comes around.

Flash photography is allowed when looking at the company's brief public history:

Wal-Mart is an Inside Value newsletter service selection.

For the first time, longtime Fool contributor Rick Munarriz also used Shutterfly for his own family's Christmas cards this past holiday season. He was impressed. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.