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Pitney Bowes (PBI) Q4 Earnings: Stock Likely to Disappoint?
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Pitney Bowes Inc. (PBI - Free Report) is slated to release its fourth-quarter 2016 results before the opening bell on Feb 1.
Last quarter, the company had posted a negative surprise of 8.3%. The company has had a dismal earnings surprise history, having missed estimates each time in the past four quarters, resulting in an average negative surprise of 10.9%.
Let's see how things are shaping up for this announcement.
Factors to Consider
Pitney Bowes’ fourth-quarter 2016 results are expected to face the brunt of the sustained weak performance in its software andNorth American Mailing business. Though the company has adopted multiple measures to boost profits at the software segment, it has not yet produced tangible results. In addition, an uncertain global economic environment is likely to further hurt the production mail and software businesses, marring the company’s top-line performance.
The company believes that weakening market conditions in the technology industry have affected performance of the Software business. Also, the sluggish global economic environment is anticipated to hamper production mail and software businesses in the near term, limiting the company’s growth momentum.
Further, Pitney Bowes has been experiencing a surge in its operating expenses on account of ERP implementation in the U.S. and higher marketing expenses in relation to aggressive advertising and marketing strategies. Incremental marketing expense related to the advertising campaign is anticipated to be highest in the first and fourth quarters of 2016. This, in turn, can hurt financials in the near term. However, benefits of ERP materialization are expected to materialize in the to-be-reported quarter, which will provide a boost to profits.
In addition to this, currency translations have affected the company’s financials over the past few quarters and are expected to impact earnings and revenues in the upcoming release as well. In fact, currency volatility is proving to be a drag on the e-commerce business, which happens to be the company’s strongest profit churner.
Meanwhile, the company’s shares have performed dismally in recent times. The stock has recorded an average negative return of 18.4% over the past year, in stark contrast to the Zacks categorized Office Automation & Equipment industry’s positive return of 4.1%.
Despite these negatives, Pitney Bowes’ steady transformation process over the past three years to create long-term flexibility for investment reinstates hope. In this regard, the company’s decision to exit low-margin countries like Mexico, South Africa and five markets in Asia is likely to help channel the company’s resources into more profitable areas and thus, contribute to earnings growth.
In addition, some of the company’s recently completed acquisitions, including Borderfree e-commerce, Real Time Content and EngageOne Video software solution, are anticipated to contribute to top-line growth in the to-be-reported quarter. Also, the recent buyout of Enroute Systems has fortified the company’s shipping logistics portfolio and is likely to propel growth, moving ahead.
Pitney Bowes formed a couple of strategic alliances with Alpine Consulting and Lighthouse Computer Services. Further, the company introduced its flagship product – SmartLink – in the Canadian market. These steps will help the company gain market traction and bolster revenues.
Pitney Bowes Inc. Price, Consensus and EPS Surprise
Our proven model does not conclusively show that Pitney Bowes will beat earnings estimates in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Earnings ESP for the company is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 58 cents.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Pitney Bowes has a Zacks Rank #4 (Sell). As it is, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +3.73% and a Zacks Rank #3. The company is slated to report fourth-quarter earnings on Feb 1.
AXIS Capital Holdings Ltd. (AXS - Free Report) has an Earnings ESP of +6.45% and a Zacks Rank #3. The company is set to report fourth-quarter earnings on Feb 1.
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How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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Pitney Bowes (PBI) Q4 Earnings: Stock Likely to Disappoint?
Pitney Bowes Inc. (PBI - Free Report) is slated to release its fourth-quarter 2016 results before the opening bell on Feb 1.
Last quarter, the company had posted a negative surprise of 8.3%. The company has had a dismal earnings surprise history, having missed estimates each time in the past four quarters, resulting in an average negative surprise of 10.9%.
Let's see how things are shaping up for this announcement.
Factors to Consider
Pitney Bowes’ fourth-quarter 2016 results are expected to face the brunt of the sustained weak performance in its software andNorth American Mailing business. Though the company has adopted multiple measures to boost profits at the software segment, it has not yet produced tangible results. In addition, an uncertain global economic environment is likely to further hurt the production mail and software businesses, marring the company’s top-line performance.
The company believes that weakening market conditions in the technology industry have affected performance of the Software business. Also, the sluggish global economic environment is anticipated to hamper production mail and software businesses in the near term, limiting the company’s growth momentum.
Further, Pitney Bowes has been experiencing a surge in its operating expenses on account of ERP implementation in the U.S. and higher marketing expenses in relation to aggressive advertising and marketing strategies. Incremental marketing expense related to the advertising campaign is anticipated to be highest in the first and fourth quarters of 2016. This, in turn, can hurt financials in the near term. However, benefits of ERP materialization are expected to materialize in the to-be-reported quarter, which will provide a boost to profits.
In addition to this, currency translations have affected the company’s financials over the past few quarters and are expected to impact earnings and revenues in the upcoming release as well. In fact, currency volatility is proving to be a drag on the e-commerce business, which happens to be the company’s strongest profit churner.
Meanwhile, the company’s shares have performed dismally in recent times. The stock has recorded an average negative return of 18.4% over the past year, in stark contrast to the Zacks categorized Office Automation & Equipment industry’s positive return of 4.1%.
Despite these negatives, Pitney Bowes’ steady transformation process over the past three years to create long-term flexibility for investment reinstates hope. In this regard, the company’s decision to exit low-margin countries like Mexico, South Africa and five markets in Asia is likely to help channel the company’s resources into more profitable areas and thus, contribute to earnings growth.
In addition, some of the company’s recently completed acquisitions, including Borderfree e-commerce, Real Time Content and EngageOne Video software solution, are anticipated to contribute to top-line growth in the to-be-reported quarter. Also, the recent buyout of Enroute Systems has fortified the company’s shipping logistics portfolio and is likely to propel growth, moving ahead.
Pitney Bowes formed a couple of strategic alliances with Alpine Consulting and Lighthouse Computer Services. Further, the company introduced its flagship product – SmartLink – in the Canadian market. These steps will help the company gain market traction and bolster revenues.
Pitney Bowes Inc. Price, Consensus and EPS Surprise
Pitney Bowes Inc. Price, Consensus and EPS Surprise | Pitney Bowes Inc. Quote
Earnings Whispers
Our proven model does not conclusively show that Pitney Bowes will beat earnings estimates in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Earnings ESP for the company is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 58 cents.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Pitney Bowes has a Zacks Rank #4 (Sell). As it is, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
American Financial Group, Inc. (AFG - Free Report) , which is set to report fourth-quarter earnings on Feb 1, has an Earnings ESP of +5.56% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +3.73% and a Zacks Rank #3. The company is slated to report fourth-quarter earnings on Feb 1.
AXIS Capital Holdings Ltd. (AXS - Free Report) has an Earnings ESP of +6.45% and a Zacks Rank #3. The company is set to report fourth-quarter earnings on Feb 1.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>