About Getty Images Holdings
Have you ever heard of the term “stock photos?”
You know, those ultra generic photos that can be found plastered on a brochure devised by your locally acclaimed top real estate agent or your favorite sports team and just about any other piece of media that is just itching to get a sufficient amount of your attention so as to wrap you in and hopefully win you over, and your money for that matter?
Organizations across the board that engage in this sort of publicity activity love, and we mean love, companies such as Getty Images Holdings, better known simply as Getty Images.
In a more simple yet accurate sense, Getty is one of the world’s largest visual media companies that derives a large bulk of its revenue through distributing stock photos, allowing users to license the images on its platform, of course, for what can sometimes be a rather hefty price to pay.
Make no mistake about it, Getty goes up against some pretty stiff competition as the stock image space is comparably niche relative to other broader industries and sectors.
Some of the company’s competition includes the likes of publicly traded Shutterstock, Adobe along with a multitude of other smaller but increasingly more nimble competitors that Getty Images has to deal with and more importantly, continuously stay ahead of.
One of the other interesting things worth noting regarding Getty is that, from our lens, this company runs a fairly recession resistant business model, as no matter how bad the state of the general economy, there will most likely always be people, companies or other entities that want or need to increase their sales and/or their media presence overall, thus, the need for Getty’s services and seemingly sensible offerings.
Now that some of the groundwork on Getty Images and its line of business have been laid out, it’s only fitting that we dive right into the stock and its core financials so as to try to figure out whether or not this specialty media company’s stock is worth considering investing in for years to come.
Getty Images’ stock financials
Trading at a relatively inexpensive share price of $4.47, Getty Images has a market capitalization of $1.8 billion in addition to not having either a readily available price-to-earnings (P/E) ratio nor an annual dividend that it distributes to its shareholder base.
Getting the wheels turning, we understand Getty not having a price-to-earnings ratio available as it is likely that its executive team has opted to preserve and retain as much capital as possible in order to keep its business growing, let alone well capitalized.
At first blush, we guess that Getty is actually net profitable given its relative scale within the industry, which to us is all the more reason that the company is just keen on retaining and reinvesting any earnings and not technically having any positive earnings to display.
We could be wrong, but we’ll never know unless we opt to move forward and learn more about Getty and its core financials.
As it relates to the company’s balance sheet, Getty’s is stellar as, according to TD Ameritrade’s platform, it maintains $829 million in total assets as well as $119 million in terms of total liabilities (both of these figures were reported in 2021).
There’s not much to say on our end regarding the overall structure and state of the company’s balance sheet, other than that it is in great, recession ready shape, as its total assets outweigh its total liabilities by a substantial sum.
When it comes to the company’s income statement, in 2020 the company achieved around $815.4 million in terms of total annual revenue, subsequently attaining nearly $919 million in 2021.
It doesn’t seem as though Getty is far from reaching $1 billion in total revenue in the foreseeable future but putting our speculations aside for the moment, it is an objective positive that even during some of the most turbulent of recent economic times that the company has been able to keep revenue at similar levels of that when the economy was in a better state.
Again, no complaints from our end, especially as it largely validates our theory that Getty’s business model is resistant to recessionary pressure(s).
Onto the company’s cash flow statement, between 2020 and 2021 Getty’s net income has been inching closer and closer towards positive, tucked in at -$42 million in 2020 and rising to -$3 million as reported in 2021, according to TD Ameritrade’s platform.
This is yet another positive from our end as Getty’s handsomely weathered the 2020 storm and expeditiously ducked its head just under positive net income territory.
This was a great recovery on Getty’s part.
Getty Images’ stock fundamentals
Frankly, this company’s trailing twelve month (TTM) net profit margin doesn’t leave us as very happy campers.
Namely, according to TD Ameritrade’s platform, Getty’s TTM net profit margin is a measly -12.48% in comparison to the industry’s average of 17.86%.
This puzzles us.
We’re not exactly sure why Getty’s annual net profit margin is as disappointing as it is, however, it may be that its aforementioned competitors, not to mention its smaller, again, more nimble adversaries could be nipping away at its lunch.
Regardless of rhyme or reason, we don’t like it.
At all.
Additionally, the company’s TTM returns on both assets and investment are also substantially lower than that of the industry’s average.
For example, according to TD Ameritrade’s platform, Getty’s TTM return on assets are -5.37% to the industry’s average of 14.18%.
We view this as a worrying discrepancy, to say the least.
Should you buy Getty Images’ stock?
This is a company with a large amount of market share and dominance in the specialty image licensing and media spaces.
Nevertheless, it is our view that the company’s core financials are far from compelling, especially given the dominance it has within the previously mentioned sectors.
Even though the company has a stellar balance sheet, its TTM net profit margin is quite disappointing to us and if the company hasn’t been able to consistently notch a higher net profit margin since its founding in 1995, we have no reason to believe this will change in the foreseeable future.
Combining all of this information, we deem it most appropriate to give the company’s stock a “sell” rating.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.