(SSTK) – Return on invested capital from Shutterstock Insights
Taken from Benzinga Pro data, Shutterstock (NYSE: SSTK) posted a loss in revenue since the second quarter, totaling $ 22.17 million. Sales, on the other hand, rose 2.38% to $ 194.44 million in the third quarter. Shutterstock achieved a profit of $ 33.23 million and sales of $ 189.91 million in the second quarter.
What is the ROIC?
Profit data without context is unclear and can be difficult to base on trading decisions. Return on invested capital (ROIC) helps filter the noise signal by measuring the annual profit before tax versus the capital invested by a company. Typically, a higher ROIC suggests successful growth of a business and is a sign of higher earnings per share in the future. In the third quarter, Shutterstock posted a ROIC of 7.14%.
It is important to keep in mind that the ROIC assesses past performance and is not used as a predictive tool. This is a good measure of a company’s recent performance, but does not take into account factors that could affect profits and sales in the near future.
Return on invested capital is a measure of the annual profit before tax relative to the capital invested by a company. Changes in profits and sales indicate changes in a company’s ROIC. A higher ROIC is generally indicative of successful business growth and is a sign of higher earnings per share in the future. A low or negative ROIC suggests otherwise. In the third quarter, Shutterstock posted a ROIC of 7.14%.
Keep in mind that while the ROIC is a good measure of a company’s recent performance, it is not a very reliable predictor of a company’s profits or sales in the near future.
For Shutterstock, the positive return on invested capital ratio of 7.14% suggests that management is allocating its capital efficiently. An efficient capital allocation is a positive indicator that a business will achieve more sustainable success and favorable returns over the long term.
Shutterstock reported third-quarter earnings per share of $ 0.7 / share, beating analysts’ expectations of $ 0.58 / share.