Credit: Image source: Getty Images.What happened
Shares of Stamps.com (NASDAQ: STMP) were getting shredded today. Investors brushed off better-than-expected results in its third-quarter earnings report as worries about slowing profit growth, a trade war with China, and a potential change in its relationship with the Postal Service persisted. Stamps.com stock closed the day down 9.7%.
Image source: Getty Images.
So what
The postage specialist reported another round of strong revenue growth -- up 25% to $143.5 million, topping estimates at $132.5 million. However, gross profit growth in the quarter was slower, rising 18%, as service costs more than doubled to $25.1 million, and non- GAAP gross margin fell from 81.7% to 77.5%. Adjusted earnings per share increased just 3% to $2.76, but that still beat estimates at $2.34.
CEO Ken McBride summed up the quarter:
Now what
Management raised its full-year guidance in part to account for the Metapack acquisition, calling for revenue of $550 million to $580 million, up from a previous range of $530 million to $560 million. That compares with the analyst consensus at $565.7 million. On the bottom line, it raised its adjusted EPS guidance from a range of $10.15 to $11.15, to a range of $10.60 to $11.60, better than the average analyst estimate at $10.79.
Although the company beat estimates, traders seem more focused on slowing profit growth, the trade war, and a possible change in its contract with the post office. Shares of Stamps.com are now down more than 40% since their peak this summer on those concerns, and they could remain that way as profits are expected to be relatively flat through next year.
10 stocks we like better than Stamps.com
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 10 best stocks for investors to buy right now... and Stamps.com wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of August 6, 2018
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Stamps.com. 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
