Personal Finance

Why Shares of Stamps.com Inc. Popped 10.5% in May

Gettyimages

Gettyimages

Stamps.com has made shipping packages easier for businesses.

What: Shares of Internet postage company Stamps.com Inc. (NASDAQ: STMP) jumped 10.5% in the month of May, according to data provided by S&P Global Market Intelligence , after the company reported massive growth in the first quarter of 2016.

So what: Revenue jumped 86% in the quarter to $81.8 million and non-GAAP earnings per share were up 139% to $1.72. Some of the growth comes from the integration of the Endicia acquisition and resulting cost savings, but the large increase in earnings shows some solid operational momentum.

To put the market's surprise in perspective, analysts were expecting revenue of $69.7 million and earnings of just $1.07 per share. On top of the earnings beat, management also said it expects full-year revenue of $310 million to $330 million and earnings of $6.00 to $6.50 per share.

Now what: Stamps.com is clearly gaining traction with customers large and small, surprising investors with how quickly it can turn that growth into profit. That's largely because mailing and shipping gross margin is a whopping 84.3%, giving incredible leverage to operational costs. If management can keep growing the top line and keep operating costs under control, there's tremendous upside for Stamps.com. And with shares trading at only around 15 times earnings, I think the long-term future looks bright for the company.

A secret billion-dollar stock opportunity

The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

STMP

Other Topics

Stocks

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More