Critical Review: TrueCar (TRUE) vs. Shutterstock (SSTK)

TrueCar (NASDAQ: TRUE) and Shutterstock (NYSE:SSTK) are both small-cap computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, dividends, valuation and profitability.

Profitability

This table compares TrueCar and Shutterstock’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TrueCar -9.86% -11.00% -8.49%
Shutterstock 5.59% 11.08% 6.34%

Institutional & Insider Ownership

91.7% of TrueCar shares are held by institutional investors. Comparatively, 63.0% of Shutterstock shares are held by institutional investors. 15.5% of TrueCar shares are held by company insiders. Comparatively, 47.3% of Shutterstock shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

TrueCar has a beta of 3, suggesting that its stock price is 200% more volatile than the S&P 500. Comparatively, Shutterstock has a beta of 1.45, suggesting that its stock price is 45% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for TrueCar and Shutterstock, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TrueCar 1 2 7 0 2.60
Shutterstock 1 6 0 0 1.86

TrueCar currently has a consensus target price of $18.50, suggesting a potential upside of 10.84%. Shutterstock has a consensus target price of $38.40, suggesting a potential upside of 12.41%. Given Shutterstock’s higher probable upside, analysts plainly believe Shutterstock is more favorable than TrueCar.

Earnings & Valuation

This table compares TrueCar and Shutterstock’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
TrueCar $306.80 million 5.36 -$16.51 million ($0.35) -47.69
Shutterstock $517.47 million 2.29 $57.99 million $0.81 42.17

Shutterstock has higher revenue and earnings than TrueCar. TrueCar is trading at a lower price-to-earnings ratio than Shutterstock, indicating that it is currently the more affordable of the two stocks.

Summary

Shutterstock beats TrueCar on 8 of the 13 factors compared between the two stocks.

About TrueCar

TrueCar, Inc. is an Internet-based information, technology, and communication services company. The Company has a data-driven online platform, which features market data and analytics. The Company-branded platform is available on its TrueCar Website and mobile applications. It customizes and operates its platform on a co-branded basis for its affinity group marketing partners, including financial institutions, membership-based organizations, and employee buying programs for a range of enterprises. The Company enables users to obtain market-based pricing data on new and used cars, and to connect with its network of TrueCar Certified Dealers. Its network of over 13,000 TrueCar Certified Dealers consists primarily of new car franchises, as well as independent dealers selling used vehicles. Its subsidiary, ALG, Inc., provides forecasts and consulting services regarding determination of the residual value of an automobile at given future points in time.

About Shutterstock

Shutterstock, Inc. (Shutterstock) is a global technology company that operates a two-sided marketplace for professionals to license content. The Company’s library of content includes digital imagery, which consists of licensed photographs, vectors, illustrations and video clips that customers use in their visual communications, such as Websites, digital and print marketing materials, corporate communications, books, publications and video content, and commercial music, which consists of music tracks and sound effects and which is often used to complement digital imagery. It also offers digital asset management services through its cloud-based digital asset management platform (webdam). Its global marketplace brings together users and contributors of content by providing a collection of content its customers can pay to license and incorporate into their work and by compensating contributors as their content is licensed to customers.

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