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Why Shutterfly (SFLY) Stock Is Higher Today

Stocks in this article: SFLY

NEW YORK (TheStreet) --Shares of Shutterfly Inc. (SFLY) are higher by 1.57% to $50.62 on heavy trading volume on Wednesday afternoon.

The online photo memory maker is reported to be close to finishing the process of reviewing offers to purchase the company.

So far, 4.68 million shares of Shutterfly exchanged hands as compared to its average daily volume of 735,000 shares.

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Several private equity firms are reported to have expressed interest in acquiring Shutterfly, including Hellman & Friedman LLC, Bain Capital LLC, and Silver Lake Partners LP.

The cutoff period for sending in offers to buy the company is the end of this week and a deal could be completed in September, Bloomberg reports.

Shutterfly may have a $2 billion sale value, sources told Bloomberg.

Separately, TheStreet Ratings team rates SHUTTERFLY INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate SHUTTERFLY INC (SFLY) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SHUTTERFLY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, SHUTTERFLY INC reported lower earnings of $0.19 versus $0.55 in the prior year. For the next year, the market is expecting a contraction of 173.7% in earnings (-$0.14 versus $0.19).
  • 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 129.0% when compared to the same quarter one year ago, falling from -$11.81 million to -$27.05 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet & Catalog Retail industry and the overall market, SHUTTERFLY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of SHUTTERFLY INC has not done very well: it is down 9.05% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • Despite currently having a low debt-to-equity ratio of 0.34, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.36 is very high and demonstrates very strong liquidity.
  • You can view the full analysis from the report here: SFLY Ratings Report

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