Would you like to invest in a company that has seen stock appreciation of more than 90% year to date? In the first quarter, this company’s customer count increased 20% year over year, and its average order value bounced 7% year over year. This company continues to beat quarterly expectations, and it recently increased full-year revenue guidance.
The big picture
Shutterfly, Inc. (NASDAQ:SFLY) came out of nowhere in 1999. Since that time, the company’s popularity has exploded. It’s now the go-to location for digitalized personal photo services in the United States. In addition to photo printing,
Shutterfly’s revenue has consistently increased annually. Earnings had consistently increased until a setback in 2011, but earnings bounced back in 2012. Below are the diluted EPS numbers:
As you can see, Shutterfly is always in the black, but earnings growth has been tepid. On the other hand, many investors prefer to see slow earnings growth, because it’s often more sustainable. On a quarterly basis, three of the last four quarters have been losses, but this was partly due to acquisition costs.
Shutterfly, Inc. (NASDAQ:SFLY) has been very aggressive with acquisitions, which should help top-line growth. These acquisitions look to be a wise strategy because one important trend, which we’ll get to soon. Shutterfly’s acquisitions have included MyPublisher, Penguin Digital, ThisLife, and Photoccino.
An important trend
According to Alexa.com, Shutterfly.com ranks No. 1,558 in the world and No. 389 in the United States for online traffic. The site always receives the most visitors late in the year — around the holidays. Traffic at the current time of year is slightly better than last year, which is a positive sign. In many cases where a company relies heavily on online traffic, we will look at page views and time-on-site trends, but this situation is different.
According to Alexa.com, the age demographic of 35-44 is by far the most overrepresented at Shuterfly.com. That’s because many people in this age demographic have children. When people have children in their household, they take more pictures — a lot more pictures. That being the case, more people with children is a positive for Shutterfly, Inc. (NASDAQ:SFLY). However, if you’re looking at long-term trends, the outlook is weak.
When reading the information below, keep in mind that people have more children when they’re confident about the economy. They have more confidence in their income potential and their ability to provide for those children. When the economic outlook is fragile, people tend to have fewer children as they don’t feel as confident in their ability as providers.
According to the United States Census Bureau, United States population growth stood at 1.7% in 1960 and 1961. That would be the peak for population growth between then and the present. In the second half of the 1970s, population growth held steady at 1.10%. This weaker number related to a struggling economy. Population growth increased in the 1990s, but in 2010, population growth reached its lowest level on record at 0.8%. That all-time low was then broken in 2011 at 0.7%. Population growth bounced back to 0.9% in 2012, but that’s still considerably lower than the average.