Financial Analysis: West Marine (WMAR) vs. Stamps.com (STMP)

Stamps.com (NASDAQ: STMP) and West Marine (NASDAQ:WMAR) are both retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Profitability

This table compares Stamps.com and West Marine’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stamps.com 31.54% 35.46% 22.88%
West Marine 8.58% 27.26% 18.86%

Insider and Institutional Ownership

57.9% of West Marine shares are owned by institutional investors. 11.5% of Stamps.com shares are owned by company insiders. Comparatively, 27.5% of West Marine shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Stamps.com and West Marine, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stamps.com 0 0 6 0 3.00
West Marine 0 2 0 0 2.00

Stamps.com presently has a consensus price target of $217.00, suggesting a potential upside of 24.00%. West Marine has a consensus price target of $10.49, suggesting a potential downside of 19.16%. Given Stamps.com’s stronger consensus rating and higher probable upside, equities analysts plainly believe Stamps.com is more favorable than West Marine.

Dividends

West Marine pays an annual dividend of $0.20 per share and has a dividend yield of 1.5%. Stamps.com does not pay a dividend. West Marine pays out 64.5% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Stamps.com and West Marine’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Stamps.com $364.30 million 8.40 $75.22 million $7.63 22.94
West Marine N/A N/A N/A $0.31 41.84

Stamps.com has higher revenue and earnings than West Marine. Stamps.com is trading at a lower price-to-earnings ratio than West Marine, indicating that it is currently the more affordable of the two stocks.

Summary

Stamps.com beats West Marine on 9 of the 12 factors compared between the two stocks.

Stamps.com Company Profile

Stamps.com Inc. is a provider of Internet-based mailing and shipping solutions in the United States. The Company offers mailing and shipping products and services to its customers under the Stamps.com, Endicia, ShipStation, ShipWorks and ShippingEasy brands. It operates through the Internet Mailing and Shipping Services segment. Under the Stamps.com and Endicia brands, customers use its United States Postal Service (USPS) only solutions to mail and ship a range of mail pieces and packages through the USPS. USPS mailing and shipping solutions enable users to print electronic postage directly onto envelopes, plain paper, or labels using only a standard personal computer, printer and Internet connection. The Company offers USPS mailing and shipping services, multi-carrier shipping services, mailing and shipping services, branded insurance and international postage solutions. The Company offers customized postage under the PhotoStamps and PictureItPostage brand names.

West Marine Company Profile

West Marine, Inc. is a waterlife outfitter for cruisers, sailors, anglers and paddlesports enthusiasts. The Company offers a selection of core boating and water recreation products, primarily serving the needs of boat owners and professionals providing services to them. It services its customers through physical stores and two e-commerce Websites. It is a specialty retailer of boating supplies, gear, apparel, footwear and other waterlife-related products. It operates approximately 260 stores located in approximately 40 states, Puerto Rico and Canada. Its products include boating products and merchandise expansion products. Its boating products include maintenance, electronics, sailboat hardware, anchors/docking/moorings, engine systems, boats/outboards, ventilation, navigation, trailering, seating/boat covers and barbecues/appliances. Its merchandise expansion products include clothing accessories, fishing, watersports, paddlesports, coolers and waterlife lifestyle accessories.

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