Now Very Interesting

Aug. 13, 2019 5:20 PM Inc. (STMP)8 Comments


  • After the challenging year has had, Q2 2019 offered investors some respite.
  • Substantial acquisitions and heavy stock-based compensation take away from's bottom line profitability.
  • On balance, its valuation is starting to look attractive.
  • Looking for more? I update all of my investing ideas and strategies to members of Deep Value Returns. Get started today »

Investment Thesis (NASDAQ:STMP) is a stock which has rapidly fallen from grace. Naturally, this appeals to my contrarian, deep value stance. is trying very hard to steady its footing.

For now, its valuation, despite being more attractive, is still slightly expensive for this value investor.

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Changing My Mind

Back in March 2019, when the share price was approximately $83, I wrote an article titled, My Lessons In Sunken Cost Bias, and here is an excerpt:

[I was] spending time trying to figure out why investing in this company could work out satisfactorily. As investors, the more time we spend on a company, it is only natural that we become increasingly optimistic about its positive prospects, while at the same time turning down the volume on the negative reasons why it won't work out.

The point of that article was to describe how I had spent a considerable amount of time attempting to ascertain all the moving parts of an investment in and whether it carried enough margin of safety. At the time, I concluded by saying that investors would be better off not getting involved with the company.

Today's share price is a more appealing $55 and $1.2 billion market cap - essentially the same price was in 2015.

Looking ahead, still carries a lot of uncertainty, predominantly around whether it will continue to be as acquisitive as it has been in the past.

Below is a table from my previous article to get a feel for's cash flow movements.

For example, for 2018,'s cash flow from operations reached $276 million. But that year, spent $209 million in the acquisition of MetaPack. Consequently,'s 2018 actual free cash flow is not $273 million, but closer to $60 million once MetaPack is incorporated.

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This article was written by

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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