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3 Key Value Drivers to Shutterfly's Stock Price

Shutterfly ( SFLY ) provides online services that allow customers to upload, share, print and store pictures with easy to use web-design services. The company also provides printing services and other print-on-demand opportunities for commercial and retail clients. Below we look at the three main drivers of value when evaluating the stock. The company competes with online services like Hewlett-Packard's (NYSE:HPQ) Snapfish, Kodak EasyShare Gallery and American Greetings - Photoworks and Webshots brands. Increasingly Wal-Mart (NYSE:WMT), Costco ( COST ) and Sam's Club offer low cost digital photography products and services.

We currently have a$65.88 price estimate for Shutterfly's stock which is about 20% above the current market price.

The 3 Key Value Drivers

1) Average Price per Order

The average rice per order measures the size of each order placed on the Shutterfly website by the customers. This increased steadily from $26 in 2006 to $33 in 2010.

Trefis estimates a strong increase in the average prices and forecasts the linear trend will continue in the coming years. The driving factors for this growth are the increased contribution of personalized products and services in the product mix and increasing R&D spend. However, a deterioration in macroeconomic environment could result lower average prices.

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2) Total No. of Customers

The total number of customers shows the number of individuals who have shopped at least once on the Shutterfly site. This number has expanded rapidly from 1.7 million in 2006 to 4.1 million in 2010.

We expect the strong customer acquisition on behalf of Shutterfly to increase in the coming years as e-commerce further gains traction. The main factors driving this growth are the untapped potential of the online gifts and stationery and the increasing proliferation of online media. Shutterfly acquired Tiny Prints recently and this will significantly expand their customer base as well, see Acquisitions and Partnerships Drive Shutterfly's Growth.

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3) Orders per Customer

Orders per customer refers to the number of orders placed by each customer on the Shutterfly website every year. We expect the orders per customer to decline marginally, then remain flat and subsequently increase towards the end of our forecast years.

The main factors driving the increase of this parameter are increasing tendency for repeated purchases on the Shutterfly website and faster, cheaper Internet connectivity which makes online purchases easy. Customers will repeat purchases only when their first time experience is a positive one, and so the company needs to ensure timely delivery and quality customer service to encourage repeat buyers.

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See our complete analysis for Shutterfly

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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    Trefis is an interactive financial community structured around trends, forecasts and insights related to some of the most popular stocks in the US. Whereas most finance sites simply give you the facts about where a stock has been and what a company has done in the past, Trefis focuses entirely on the future.

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