Why Stock Soared 34.8% in August

What happened

Shares of (NASDAQ: STMP) climbed 34.8% in August, according to data from S&P Global Market Intelligence, after the beaten-down online-postage specialist announced encouraging quarterly results and raised its full-year outlook. stock soared 27% on Aug. 8, 2019 alone -- the first trading day after the company told investors its second-quarter revenue declined 0.6% year over year to $138.8 million, translating to a more than 50% decline in adjusted net income to $22.3 million, or $1.25 per share. Recall that's top- and bottom-line performance is still under pressure on the heels of management's surprise decision in February to end the company's exclusive partnership with the U.S. Postal Service (USPS) in order to embrace partnerships with other carriers in the increasingly competitive shipping industry.

Hand putting stamp on white envelope.


So what

To be clear, chairman and CEO Ken McBride noted their second-quarter results were essentially in line with expectations -- though even that left investors breathing a sigh of relief considering the stock was still reeling from not only its big drop after the February news, but also after the company lowered its already sobering guidance in May due to the potential fallout of the USPS renegotiating service agreements with some of's reseller partners.

During last month's call, however, McBride explained that was seeing "a positive shift in the USPS's negotiating position with" those partners -- a potential indication that the government entity is beginning to realize the value those resellers were bringing to the table.

Now what

As such, revised its 2019 outlook for the better, calling for revenue of $520 million to $560 million (up $10 million from the lower end of its old range), and adjusted earnings per share (EPS) of $3.60 to $4.85 (up $0.25 per share from the bottom end of its previous target).

And isn't pumping the breaks anytime soon. Just last week, the company launched its new GlobalPost International shipping services to address concerns and avoid disruptions related to the United States leaving the Universal Postal Union (UPU).

"We know customers simply can't afford disruptions to their shipping services," McBride said. "That's why we're proud to be able to offer these GlobalPost services to our many international shipping customers who have been concerned about the potential USPS disruption caused by the breakdown of the UPU/U.S. relationship."

In the end, it's hard to blame for making the most of an otherwise frustrating situation. If that helps spur its post-USPS turnaround, and with shares still trading down nearly 70% over the past year as of this writing, I suspect stock could still prove an enticing value for investors today.

10 stocks we like better than
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of June 1, 2019


Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends The Motley Fool has a disclosure policy.

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


Latest Markets Videos

    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