Yahoo Finance Why Shutterstock, Inc. (NYSE:SSTK) Could Be Worth Watching
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Shutterstock, Inc. (NYSE:SSTK), which is in the online retail business, and is based in United States, led the NYSE gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Shutterstock’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Shutterstock
What is Shutterstock worth?
The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Shutterstock’s ratio of 34.58x is trading in-line with its industry peers’ ratio, which means if you buy Shutterstock today, you’d be paying a relatively reasonable price for it. So, is there another chance to buy low in the future? Given that Shutterstock’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Shutterstock?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profit expected to grow by 46% over the next couple of years, the future seems bright for Shutterstock. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? SSTK’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at SSTK? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on SSTK, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for SSTK, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Shutterstock. You can find everything you need to know about Shutterstock in the latest infographic research report. If you are no longer interested in Shutterstock, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
