Stamps.com (NASDAQ:STMP) investors received a harsh lesson in the perils of too-far, too-fast momentum-stock run-ups this morning, when shares fell as much as 22% even though the company delivered a massive earnings beat Thursday evening. As AP reports, Stamps.com earned $2.68 per share, adjusted, last quarter -- far more than the $1.91 per share that Wall Street had anticipated. Revenue likewise trumps estimates, coming in at $115.1 million, versus Wall Street's expected $109.4 million.
Regardless, Stamps.com stock sold off in a big way and remains down 18.5% as of 11:30 a.m. EDT.
By most financial metrics, Stamps.com didn't just "beat" estimates but crushed them. Quarterly sales gained 24% year over year. Net income exploded 142% higher, to $2.49 per share. Why, management even raised guidance.
As of today, management expects to end the year with sales between $435 million and $460 million (in line with previous guidance), but revised last quarter's profit guidance by more than $1 -- to between $6.20 and $7.16. Nevertheless, the stock is down.
Stamps.com is predicting it will earn between $9 and $10 per share, adjusted, by year-end. That compares favorably to the $8.05-per-share pro forma estimates being mooted by analysts on Yahoo! Finance right now. I think this sets up Stamps.com for another earnings beat in Q4.
Meanwhile, on a GAAP basis, Stamps.com is predicting it will earn only about $6.68 per share at the midpoint of its new guidance. Now, $6.68 in GAAP net income would equate to 62% year-over-year growth and easily justify the stock's current-year P/E ratio of 26.6. Also, with analysts projecting long-term earnings growth of 21% annually for Stamps.com, the stock doesn't look too horribly overvalued at today's price even if growth slows from this year's breakneck pace. So, logically, the stock should go up from here.
Then again, as we learned today, with momentum stocks, anything is possible -- even shares falling on another earnings beat.