Take a Picture, It'll Last Longer

Snapshots change when they become moving pictures.

Shares of Shutterfly (NAS: SFLY) opened nearly 10% higher this morning after the company posted better-than-expected quarterly results. However, all of those gains were gone just three hours later.

Wall Street can be fickle that way.

The report itself was solid. Revenue soared 60% to $91.3 million. Yes, Shutterfly posted a loss -- this is the slow time of the year for a highly seasonal business -- but the deficit of $0.29 a share was smaller than the $0.32-a-share hit that the market was expecting.

Shuttefly's top line was padded by last year's acquisition of high-end personalized invitations, greeting cards, and stationery products specialist Tiny Prints. Wall Street knew that, yet the pros were still only targeting quarterly revenue of $84.9 million.

The market was impressed, and the analysts at R.W. Baird raised their price target on the stock from $32 to $40.

Shutterfly's guidance is also decent, with the company moving its top-line outlook higher after emerging as the only bidder for Eastman Kodak's (OTC: EKDKQ) Kodak Gallery business.

This should be a good time for Shutterfly. In a world of Facebook photo-sharing and Instagram, many shutterbug sites are either closing down or cashing out on the cheap. Shutterfly was alone in taking on Kodak Gallery's content and accounts. American Greetings (NYS: AM) wasn't even able to smoke out a buyer for PhotoWorks when it shut the digital photography website down last year. Yahoo!'s (NAS: YHOO) Flickr is still popular, though it did dump its own namesake photo site five years ago.

Shutterfly makes sharing snapshots work through e-commerce. We're not talking about traditional photofinishing, as prints make up less than $15 million of Shutterfly's revenue. The company offers a wide array of personalized products, in line with what Vistaprint (NAS: VPRT) has achieved with personalized business products.

Shuttefly and Vistaprint remain very profitable and are growing their net sales at double-digit clips. The sectors may not be pretty, but there's something to be said about a company that can flourish in an unloved niche.

Digital future
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At the time thisarticle was published The Motley Fool owns shares of Yahoo!.Motley Fool newsletter serviceshave recommended buying shares of Yahoo! and Vistaprint. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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