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Bear of the Day: Stamps.com (STMP)

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·3 min read
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Stamps.com (STMP) helped shake up the shipping and postage industries for good and the stock has recovered nearly all of its losses after it tumbled in early 2019 when it announced it wouldn’t renew an exclusive deal with the U.S. Postal Service. Despite its strengths, STMP’s earnings revisions have trended in the wrong direction since its first quarter 2021 financial release on May 6. Meanwhile, its stock price has failed to regain momentum.

Stamps.com’s Pitch

Stamps.com is a leading provider of e-commerce shipping solutions that enable customers to “ship faster for less money with automated shipping tools.” The company offers options for small businesses, enterprises, and nearly anyone else in between. Its portfolio includes its namesake brand, as well as Endicia, ShipStation, ShippingEasy, ShipWorks, ShipEngine, and Metapack.

The goal is to provide “seamless access to mailing and shipping services through integrations with more than 500 unique partner applications.” STMP allows customers to automatically import orders from nearly anywhere they might sell, including Amazon (AMZN), Shopify (SHOP), Etsy (ETSY), PayPal (PYPL), and countless others. Users then select the best shipping method for them, with automatic tracking information provided. Stamps.com also offers discounts from USPS and UPS.

Stamps.com is prepared to grow amid the ongoing e-commerce boom. The firm’s 2020 revenue climbed 33%, after it dipped 3% in FY19.

Most recently, its Q1 FY21 revenue popped 25% to $189 million. “For the first quarter of 2021, we estimate that the gross merchandise value, or GMV, shipped by our collective customer base was over $50 billion, increasing by more than 50% year over year…In the U.S., we estimate that the total GMV shipped by our solutions was over 15% of all U.S. e-commerce,” CEO Ken McBride said on the company’ earnings call.

What Else

The long-term strength of its business remains firmly in place. And as we mentioned at the top, STMP shares already recovered from their massive early-2019 selloff, with the stock up 440% since June 2019. Yet the nearby chart shows Stamps.com shares have lagged the S&P 500 over the past year, down 7% vs. the benchmark index’s 43% run.

STMP has tumbled over 30% since mid-February, when growth stocks started to get hammered. The stock fell once again after its Q1 earnings release on May 6 on the back of somewhat disappointing guidance, with its Q2, FY21, and FY22 consensus earnings estimates down since its report.

Zacks estimates call for the company’s adjusted FY21 earnings to fall 36.5% on 4% higher revenue, as it comes up against a coronavirus-boosted 2020.

Bottom Line

Stamps.com’s recent downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) at the moment, alongside a “D” grade for Momentum. Therefore, investors might want to stay away from STMP until its stock price starts to recover.

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Stamps.com Inc. (STMP) : Free Stock Analysis Report

Shopify Inc. (SHOP) : Free Stock Analysis Report

PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report

Etsy, Inc. (ETSY) : Free Stock Analysis Report

Amazon.com, Inc. (AMZN) : Free Stock Analysis Report

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