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Why Stamps.com Shares Soared

By Brian D. Pacampara, CFA - Apr 25, 2013 at 3:52PM

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Is this meaningful? Or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of online postage provider Stamps.com (STMP) surged 24% today after its quarterly results and guidance.

So what: The stock has slumped a bit in 2013 on concerns over slowing growth, but today's first-quarter results -- adjusted EPS spiked 38% on a 13.5% revenue increase -- and upbeat full-year guidance naturally eases some of those worries. In fact, Stamps.com hit its highest level of total paid customers -- and added its largest number of new paid customers -- during the quarter, giving investors plenty of good vibes about the company's prospects going forward.

Now what: Management now sees full-year adjusted EPS of $1.95-$2.15 on revenue of $125 million $135 million, nicely above its prior view of $1.75-$1.95, and $120 million-$130 million. "[I]n summary, our Core PC Postage business model of recurring revenue and high gross mergers is demonstrating continued growth and operating margin expansion," . "We are seeing record setting performances across many of our financial and key customer metrics." With the stock blasting through its 52-week high today, and trading at a still-lofty price-to-sales of 3.5, however, I'd wait for some of the excitement to fade before buying into that bull talk.

Interested in more info on Stamps.com? Add it to your watchlist.

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