$STMP Potential Gain Of +30% According to Analyst Forecasts

Company Overview:

Stamps.com Inc. provides Internet-based mailing and shipping solutions in the United States and Europe. It operates through Stamps.com and MetaPack segment.

Investment Thesis: 

Company has performed exceptionally well over the last year in part due to Covid-19 related e-commerce boom. However they may have set the bar too high for themselves. With the their Q4 2020 earnings beating all estimates the stock dropped over 30%. Fears over lack of management guidance has investors worried this ride may soon come to an end. However their business is closely tied to e-commerce which has been and will continue to be a fast growing industry.

Financial Strength:

Quick/Current Ratio: 2.01
Debt to Equity: 0.30
Free Cash Flow: 134.9

Stamps.com has more than enough assets both long and short term to pay off all of their debts. On top of that they generate and retain enough cash to weather any potential storms. Overall we believe this company be financial stable. The company has been issuing new shares in the recent past this dilutes current shareholders and is not ideal, we believe this to be a minor inconvenience more than anything.

Operational Efficiency:

5 Year Rev Growth: 254%
Return on Assets/Equity: 16/21.4 %
Net Profit Margin: 21.4%

Management has show an ability to reinvest capital at high rates of return. While doing this they have significantly increased revenue while maintaining a respectable net profit margin.

Final Thoughts:

According to the average analyst price target for Stamps.com they are potentially deeply undervalued. Investors are spooked over future performance which caused this company to slide deeper into value territory. We believe based off core financial metrics that this company has competent management as well as a strong financial position overall. They piggyback off a fast growing industry and are off over 30% from less than a month ago. The information in this article is our opinion and the completeness and accuracy of this information is not guaranteed please view our disclaimer below for more information.

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