With the growing integration of digital technology into all areas of business, internet penetration is expected to increase significantly in the coming years. So, stock quality internet services Shutterstock, Inc. (SSTK extension), Perion Network Ltd. (PERIOD) and Liberty TripAdvisor Holdings, Inc. (LTRPA extension) could be useful additions to your portfolio. Lets understand this in detail.
The growing demand for virtual communications, remote working tools, e-commerce and streaming services has created unprecedented opportunities, driving the rapid expansion of the Internet services industry.
As of April 2023, there were 5.18 billion global internet users, equal to 64.6% of the world population. Its undeniable significance lies in enabling the broad exchange of information and ideas by connecting people around the world in a stunning display of innovation.
Furthermore, the growth of the sector is supported by the increase implementation of 5G technology, which provides faster speeds, improved connectivity and enables innovative services such as the Internet of Things (IoT). The expansion of fixed wireless access is also boosting the industry’s prospects.
According to a report by ReportLinker, the global wireless Internet services market is estimated to reach $921.97 billion by 2027, growing with a CAGR of 7%..
Investor interest in Internet stocks is evident by returns of 16.9% on the Dow Jones Internet Services Indices over the past six months. Given solid fundamentals and solid growth prospects, internet stocks SSTK, PERI and LTRPA could make wise additions to your portfolio.
Let’s take a closer look at the fundamentals of these stocks:
Shutterstock, Inc. (SSTK extension)
SSTK is a technology company that offers world-class content and innovative workflow solutions. Its image services include photos, vectors and illustrations. It also provides movies and music services with tracks and sound effects. The company caters to business professionals, media companies, and individual creators.
On May 23, SSTK announced its agreement to acquire GIPHY, Inc. from Meta Platforms, Inc. (HALF), thereby gaining access to the world’s largest GIF library and search engine. This move allows SSTK to expand beyond professional marketing and advertising, reaching a wider audience. The acquisition could increase the company’s profitability and growth.
Also, on March 21, SSTK unveiled its partnership with NVIDIA Corporation (NVDA extension) to train custom 3D models for generating 3D assets from text prompts. By combining its 3D content with NVDA’s core models and leveraging its marketing and distribution platforms, the company aims to capture a huge market opportunity.
The stock’s 12-month gross profit margin of 61.73% is 24.1% higher than the industry average of 49.76%. Similarly, its 12-month EBITDA margin of 19.47% is 9.1% higher than the industry average of 17.85%.
For the fiscal first quarter ended March 31, 2023, SSTK revenues increased 8.1% year over year to $215.28 million. Its adjusted EBITDA grew 27.3% year over year to $69.76 million. In addition, the company’s adjusted net income increased 26.8% from a year ago value to $47.13 million, while adjusted EPS increased 29% year over year to $1.29.
Consensus revenue estimate of $815.28 million for the fiscal year ending December 2023 reflects a 2.8% year-over-year improvement. Similarly, the consensus estimate for year-over-year EPS of $4.08 points to a 5.5% year-over-year increase. In addition, the company topped consensus estimates for EPS in three of the previous four quarters.
Shares of SSTK gained 1.2% intraday to close the latest trading session at $50.30.
The strong foundations of SSTK are evident in its POWR ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. POWR ratings are calculated considering 118 different factors, each optimally weighted.
SSTK has a B grade for growth, value and quality. It ranked second among 29 stocks Internet services industry.
In addition to the POWR ratings I just highlighted, you can see SSTK ratings for Sentiment, Momentum, and Stability Here.
Perion Network Ltd. (PERIOD)
Headquartered in Holon, Israel, PERI provides a comprehensive digital advertising ecosystem. It enables brands, agencies and publishers to effectively identify and engage customers across various channels. The company operates in three key areas of digital advertising: ad research; social media; and displays, video or CTV.
Doron Gerstel, CEO of PERI, expressed satisfaction with the company’s first quarter results, saying, “We continue to outperform the adtech sector despite the challenging macro environment, as reflected in our continued gains in market share and higher efficiencies, made possible by our innovative technology.All of these factors collectively are driving revenue growth and margin expansion.
Additionally, the company raised its full-year guidance for 2023 based on its current visibility and the robustness of its business model. PERI now forecasts revenue of $725-$745 million, up from its previous forecast of $720-$740 million. In addition, Adjusted EBITDA for the year is expected to reach more than $155 million, exceeding the previous forecast of $149-$153 million.
PERI’s 12-month EBIT margin of 17.17% is 103.7% higher than the industry average of 8.43%. In addition, its 12-month net income margin of 16.29% compares to the industry average of 2.65%.
PERI’s revenues increased 15.8% year over year to $145.15 million for the fiscal first quarter ended March 31, 2023. Its Adjusted EBITDA increased 38% from a year ago to 31 $.27 million.
In addition, the company’s non-GAAP net income and non-GAAP EPS increased 44.2% and 36.4% over the year-ago period to $29.90 million and 0, respectively. $.60.
PERI’s revenue is expected to grow 14.5% year over year to $732.93 million for the fiscal year ending December 2023. The company’s EPS for the current year is expected to grow 13.9 % year over year at $2.35. Additionally, the company topped consensus revenue and EPS estimates in all four trailing quarters, which is impressive.
The stock has gained 48.7% over the past year, closing the last trading session at $30.91.
PERI’s positive outlook is reflected in its POWR Ratings. The title has an overall rating of B, which translates to Buy in our proprietary rating system.
PERI has a B grade for Value, Quality and Feeling. It ranks third out of 29 socks in the Internet service industry.
Click here to access additional PERI assessments (growth, momentum and stability).
Liberty TripAdvisor Holdings, Inc. (LTRPA extension)
LTRPA operates a travel orientation platform that provides content, travel products and services. It also offers two-sided marketplaces for travelers to explore, create and share genuine user-generated content. The company operates through three segments: Tripadvisor Core; Traveler; and TheFork.
LTRPA’s 12-month gross profit margin of 78.2% is 57.2% higher than the industry average of 49.76%. Its 12-month leveraged FCF margin of 24.30% is 230.6% higher than the industry average of 7.35%. In addition, 12-month cash of $439 million compares to the industry average of $216.08 million.
For the fiscal first quarter ended March 31, 2023, LTRPA net revenues increased 41.6% year over year to $371 million. It’s regulated OIBDA extension it grew 20% over the prior year quarter to $30 million. In addition, the company’s cash inflow from operating activities increased 57.6% from its year-ago value to $134 million.
As of March 31, 2023, the company’s cash and cash equivalents totaled $1.16 billion, compared to $1.05 billion as of December 31, 2022.
The stock gained marginally intraday to close the latest trading session at $0.63.
LTRPA’s strong prospects are evident in its POWR Ratings. The title has an overall rating of B, which translates to Buy in our proprietary rating system.
LTRPA has a B grade for value, sentiment, momentum and quality. It ranked 4th out of 29 stocks within the same sector.
Click here to access additional LTRPA assessments for Growth and Stability.
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SSTK shares traded at $49.11 a share on Monday afternoon, down $1.19 or -2.37%. Year-to-date, the SSTK is down -5.97%, compared with a 12.68% increase in the benchmark S&P 500 over the same period.
About the author: Aanchal Sugandh
Aanchal’s passion for the financial markets drives his work as an investment analyst and journalist. He has a bachelor’s degree in finance and is pursuing the CFA program. He is adept at assessing the long-term prospects of stocks with his fundamental analysis skills. His goal is to help investors build portfolios with sustainable returns. Moreover…
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