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Is Stamps.com (STMP) a Great Value Stock Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Stamps.com (STMP) is a stock many investors are watching right now. STMP is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 19.53, which compares to its industry's average of 36.22. Over the past year, STMP's Forward P/E has been as high as 20.29 and as low as 6.52, with a median of 14.95.

Investors should also note that STMP holds a PEG ratio of 1.30. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. STMP's PEG compares to its industry's average PEG of 1.83. Within the past year, STMP's PEG has been as high as 1.35 and as low as 0.43, with a median of 1.

Finally, our model also underscores that STMP has a P/CF ratio of 9.70. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. STMP's P/CF compares to its industry's average P/CF of 27.62. Over the past 52 weeks, STMP's P/CF has been as high as 22.48 and as low as 3.69, with a median of 9.28.

Value investors will likely look at more than just these metrics, but the above data helps show that Stamps.com is likely undervalued currently. And when considering the strength of its earnings outlook, STMP sticks out at as one of the market's strongest value stocks.


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