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Coronavirus Isn't Slowing Down Stamps.com One Bit

By Rich Smith – May 9, 2020 at 9:03AM

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The company beat earnings in the first quarter -- and promises to keep up its momentum all year long.

Forty-seven U.S. states under full or partial lockdown; 1.3 million Americans infected with COVID-19; 77,000 dead; and 30 million Americans unemployed.  

With numbers like these, you wouldn't expect business to be booming for a company like Stamps.com (STMP), which makes its money primarily by reselling postage to ship packages in a thriving economy. And yet, on Thursday, Stamps.com reported that its sales grew 11% in the first quarter of 2020, reaching $151.3 million (more than any analyst had predicted), and with earnings up 4% as well -- also ahead of estimates.  

Circle and slash no coronavirus sign superimposed over a set of postage stamps.

Image source: Getty Images.

How did Stamps.com accomplish this? "Amidst the unprecedented challenges imposed by COVID-19 on the global economy, e-commerce has become an indispensable strategy for businesses," said CEO Ken McBride in the earnings release. It turns out shuttered storefronts and quarantined customers mean more business is being done online and by mail during the pandemic.

And this is a trend that could last awhile, too.

Guiding investors on what to expect over the course of this year, Stamps.com reaffirmed its previous guidance for fiscal 2020 -- guidance given before "the novel coronavirus" was even on the radar for most U.S. companies. Sales, says the company, will still come in between $570 million and $600 million, which at the midpoint should eclipse the $582 million revenue target Wall Street has set. Adjusted earnings should still run between $4 and $5 per share, ahead of the $4.42 analyst consensus.

And Stamps.com says it will do all this not just in the face of a pandemic but despite a USPS decision "eliminating its customized postage program and also revoking our authorization to offer products pursuant to that program effective June 16, 2020," crimping Stamps.com's business at the worst possible time.  

The fact that Stamps.com can still hit its targets despite these headwinds is, frankly, impressive.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Stamps.com. The Motley Fool has a disclosure policy.

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