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Should Value Investors Buy Stamps.com (STMP) Stock?

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Stamps.com (STMP) is a stock many investors are watching right now. STMP is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 22.80, which compares to its industry's average of 40.19. Over the past 52 weeks, STMP's Forward P/E has been as high as 24.38 and as low as 6.52, with a median of 14.95.

Investors will also notice that STMP has a PEG ratio of 1.52. 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 1.97. Within the past year, STMP's PEG has been as high as 1.63 and as low as 0.43, with a median of 1.

Finally, investors should note that STMP has a P/CF ratio of 11.58. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 30.37. Within the past 12 months, STMP's P/CF has been as high as 19.45 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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