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:
Below please find a table outlining a discounted cash flow forecast for STMP, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Stampscom Inc ranked in the 59th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 75.33% on a DCF basis. As for the metrics that stood out in our discounted cash flow analysis of Stampscom Inc, consider:
Interest coverage, a measure of earnings relative to interest payments, is 108.5 -- which is good for besting 93.52% of its peer stocks (US stocks in the Technology sector with positive cash flow).
The business' balance sheet suggests that 2% of the company's capital is sourced from debt; this is greater than merely 8.25% of the free cash flow producing stocks we're observing.
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 49.94% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
TAIT, PANW, CSGS, CACI, and ELTK 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...