Stamps.com provides Internet-based postage solutions in the United States, offering solutions for mailing and shipping various mail pieces, such as postcards, envelopes, flats, and packages using a range of United States Postal Service mail classes, including First Class Mail, Priority Mail, Priority Mail Express, Media Mail, Parcel Select, and others. The company was founded in 1996 and is based in El Segundo, California
STMP Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Stampscom Inc. To summarize, we found that Stampscom Inc ranked in the 50th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 16.67% on a DCF basis. The most interesting components of our discounted cash flow analysis for Stampscom Inc ended up being:
The stock's equity weight, or the proportion of capital from equity relative to debt, is 100. Notably, its equity weight is greater than 93.02% of US equities in the Technology sector yielding a positive free cash flow.
The business' balance sheet reveals debt to be 0% of the company's capital (with equity being the remaining amount). Approximately only 3.25% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
STMP's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 57.56% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
CPSI, IBM, BABA, CAMT, and PCYG can be thought of as valuation peers to STMP, in the sense that they are in the Technology sector and have a similar price forecast based on DCF valuation.
If your business is not on the internet, then your business will be out of business. — Bill Gates Online shopping has seen advancements in the past few months that might have otherwise taken years to adopt. These advancements benefit both consumers trapped at home and the businesses no longer...
Michael A. Gayed, CFA on Seeking Alpha | September 9, 2020
Stamps.com ([[STMP]] +13.0%) higher after Q2 earnings beat estimates with revenue +49% Y/Y and adjusted EPS +148% Y/Y.Mailing and Shipping revenue +46% to $197.9M and Customized Postage revenue soar 182% to $8.8M.Adjusted EBITDA expanded 106% Y/Y to $81M, margin rose 1,090 bps to 39.2%.During the quarter, the company repurchased ~56K shares...