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To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more. Having said that, the company's earnings growth is expected to slow down, as forecasted in the current analyst estimates. Unsurprisingly, this has led to an impressive earnings growth. Particularly, we like that the company is reinvesting heavily into its business, and at a high rate of return. Overall, we are quite pleased with Shutterstock's performance. While Shutterstock has been growing its earnings, it only recently started to pay dividends which likely means that the company decided to impress new and existing shareholders with a dividend. By the looks of it, the dividend is well covered and Shutterstock is reinvesting its profits efficiently as evidenced by its exceptional growth which we discussed above. The company is retaining the remaining 66%. The three-year median payout ratio for Shutterstock is 34%, which is moderately low. Is Shutterstock Using Its Retained Earnings Effectively? So, you may want to check if Shutterstock is trading on a high P/E or a low P/E, relative to its industry. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. This then helps them determine if the stock is placed for a bright or bleak future. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). NYSE:SSTK Past Earnings Growth July 16th 2022Įarnings growth is a huge factor in stock valuation. For example, it is possible that the company's management has made some good strategic decisions, or that the company has a low payout ratio.Īs a next step, we compared Shutterstock's net income growth with the industry and found that the company has a similar growth figure when compared with the industry average growth rate of 34% in the same period. We believe that there might also be other aspects that are positively influencing the company's earnings growth.
This certainly adds some context to Shutterstock's exceptional 29% net income growth seen over the past five years. On comparing with the average industry ROE of 15% the company's ROE looks pretty remarkable. To begin with, Shutterstock seems to have a respectable ROE. Shutterstock's Earnings Growth And 20% ROE Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. So far, we've learned that ROE is a measure of a company's profitability. What Has ROE Got To Do With Earnings Growth? So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.20. The 'return' is the profit over the last twelve months. So, based on the above formula, the ROE for Shutterstock is:Ģ0% = US$89m ÷ US$444m (Based on the trailing twelve months to March 2022). Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity Return on equity can be calculated by using the formula:
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View our latest analysis for Shutterstock How To Calculate Return On Equity? Put another way, it reveals the company's success at turning shareholder investments into profits. Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Particularly, we will be paying attention to Shutterstock's ROE today. But if you pay close attention, you might gather that its strong financials could mean that the stock could potentially see an increase in value in the long-term, given how markets usually reward companies with good financial health. Shutterstock (NYSE:SSTK) has had a rough three months with its share price down 28%.
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