Stamps.com Announces Share Repurchase Plan

After the market closed today, Stamps.com (STMP) announced a new $60.0MM share repurchase plan. The authorization is in effect for six months beginning March 14, 2019. Recall that the company’s prior $90.0MM share repurchase program expired in January after the authorized amount was acquired. Given the significant decline in shares following Stamps.com’s Q4 ’18 results and guidance, we expect the announcement to provide a welcome respite for investors. Based on today’s closing stock price and assuming the new authorization is fully exhausted by the end of Q3 ‘19, our non-GAAP EPS estimate would increase by $0.07 to $5.43 for this year and increase by $0.21 to $6.26 for FY ’20. With shares trading at approximately 10x our FY ’19 adjusted EBITDA estimate and the authorized amount easily covered by the $109.5MM in free cash flow we have projected for this year, we believe share repurchases remain an attractive use of cash.

Disclosure(s):

The author holds a long position in Stamps.com (STMP).