STMP
Stamps.com Inc
TMT, Consumer
10/11/2016
Presented
| Date | 10/05/2016 |
| Price | $95.52 |
| Market Cap | $1.74B |
| Ent Value | $1.63B |
| P/E Ratio | 49.87x |
| Book Value | $18.81 |
| Div Yield | 0% |
| Shares O/S | 18.19M |
| Ave Daily Vol | 854,781 |
| Short Int | 24.70% |
Current
| Price | $329.61 |
| Market Cap | $5.66B |
| Stamps.com, Inc. provides Internet based postage services. The company offers solutions for mailing and shipping various mail pieces, such as postcards, envelopes, flats, and packages using a range of United States Postal Service (USPS) mail classes, including First Class Mail, Priority Mail, Priority Mail Express, Media Mail, Parcel Select and others. Its services include PC postage services, photo stamps, mailing and shipping supplies store and branded insurance. The company operates through the Internet Mailing and Shipping Services segment which provides PC postage software, including NetStamps labels, shipping labels, other mailing labels, postage printers, scales and other mailing. Stamps.com was founded by James A. C. McDermott, Jeff Green and Air R. Engelberg in September 1996 and is headquartered in Los Angeles, CA. |
Publicly traded companies mentioned herein: FedEx Corporation (FDX), Pitney Bowes Inc (PBI), Stamps.com Inc (STMP), United Parcel Service Inc (UPS)
Highlights
The presenter is short shares of Stamps.com (STMP), the internet-based mailing and shipping solutions company. It operates both Stamps.com and Endicia, which it acquired in 2015 for $215 million in an all cash deal. The bull case on STMP is essentially that its stellar fundamental performance will continue, and the company can continue to grow (30% per year), earn a nice margin (~40%) and take share in the huge $230 billion postage and shipping market. However, the presenter disagrees, and thinks the fact that it is trying to compete with Pitney Bowes directly, and FedEx and UPS to varying extents is problematic. Additionally, STMP’s issues are complicated and compounded by the fact that there are plenty of places consumers and small business owners can purchase stamps and its Negotiated Service Agreement (NSA, with the USPS) is likely costing the USPS money. With poor customer service reviews and complaints about marketing and automatic subscription issues, the cost/ benefit and overall utility of STMP’s core services seems to be questionable. If the presenter’s assessment of the situation is accurate, his model shows STMP earning less than $3 per share next year (and under $100 million of EBITDA), versus the consensus at $7+ per share; in this scenario, the stock could decline by 50% or more.
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