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For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Stamps.com Inc.’s (NASDAQ:STMP) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
Did STMP perform worse than its track record and industry?
STMP’s trailing twelve-month earnings (from 31 March 2019) of US$137m has declined by -17% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 43%, indicating the rate at which STMP is growing has slowed down. What could be happening here? Well, let’s look at what’s occurring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Stamps.com has invested its equity funds well leading to a 22% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 16% exceeds the US Online Retail industry of 5.4%, indicating Stamps.com has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Stamps.com’s debt level, has increased over the past 3 years from 15% to 24%.
What does this mean?
Though Stamps.com’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. I recommend you continue to research Stamps.com to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for STMP’s future growth? Take a look at our free research report of analyst consensus for STMP’s outlook.
- Financial Health: Are STMP’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.