Shutterstock (SSTK) Is Weak On High Volume Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Shutterstock ( SSTK) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Shutterstock as such a stock due to the following factors:

  • SSTK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.6 million.
  • SSTK has traded 65,075 shares today.
  • SSTK is trading at 8.02 times the normal volume for the stock at this time of day.
  • SSTK is trading at a new low 3.09% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on SSTK:

Shutterstock, Inc. operates as an online marketplace for commercial digital content imagery. SSTK has a PE ratio of 109. Currently there are 4 analysts that rate Shutterstock a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Shutterstock has been 276,600 shares per day over the past 30 days. Shutterstock has a market cap of $2.3 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.40 and a short float of 25.5% with 22.82 days to cover. Shares are down 8.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Shutterstock as a 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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues rose by 34.0%. 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.
  • SSTK 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. To add to this, SSTK has a quick ratio of 1.92, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $21.47 million or 37.36% when compared to the same quarter last year. Despite an increase in cash flow, SHUTTERSTOCK INC's average is still marginally south of the industry average growth rate of 41.44%.
  • 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. When compared to other companies in the Internet Software & Services industry and the overall market, SHUTTERSTOCK INC's return on equity is below that of both the industry average and the S&P 500.
  • The share price of SHUTTERSTOCK INC has not done very well: it is down 19.31% 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. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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