In this commentary, I will examine Stampscom Inc’s (NASDAQ:STMP) latest earnings update (30 September 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the online retail industry performed. As an investor, I find it beneficial to assess STMP’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
How Did STMP’s Recent Performance Stack Up Against Its Past?
STMP’s trailing twelve-month earnings (from 30 September 2018) of US$166m has jumped 19% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 43%, indicating the rate at which STMP is growing has slowed down. Why could this be happening? Well, let’s look at what’s transpiring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, Stamps.com has invested its equity funds well leading to a 25% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 20% exceeds the US Online Retail industry of 7.4%, indicating Stamps.com has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Stamps.com’s debt level, has increased over the past 3 years from 17% to 27%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Stamps.com gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Stamps.com to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for STMP’s future growth? Take a look at our free research report of analyst consensus for STMP’s outlook.
- Financial Health: Are STMP’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.