Rating Change #5
Shutterfly Incorporated (SFLY) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- Net operating cash flow has significantly decreased to -$52.85 million or 86.98% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 64.0% when compared to the same quarter one year ago, falling from -$4.73 million to -$7.76 million.
- Compared to its closing price of one year ago, SFLY's share price has jumped by 139.47%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- SFLY has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 6.32, which clearly demonstrates the ability to cover short-term cash needs.
- SFLY's revenue growth has slightly outpaced the industry average of 15.3%. Since the same quarter one year prior, revenues rose by 25.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
Shutterfly, Inc. provides an Internet-based social expression and personal publishing service that enables consumers to share, print, and preserve their memories through the medium of photography. The company has a P/E ratio of 109.8, equal to the average diversified services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Shutterfly has a market cap of $1.9 billion and is part of the services sector and diversified services industry. Shares are up 50.4% year to date as of the close of trading on Thursday.You can view the full Shutterfly Ratings Report or get investment ideas from our investment research center.
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