Back to top

Image: Bigstock

Pitney Bowes (PBI) Down 3.9% Since Earnings Report: Can It Rebound?

Read MoreHide Full Article

It has been about a month since the last earnings report for Pitney Bowes Inc. (PBI - Free Report) . Shares have lost about 3.9% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Pitney Bowes Q1 Earnings Beat, Up Y/Y, View Intact

Pitney Bowes beat earnings estimates in first-quarter 2017, marking an end to five quarters of back-to-back misses. The company reported adjusted earnings of $0.36 per share, beating the Zacks Consensus Estimate of $0.34. Also, on a year-over-year basis, adjusted earnings improved 5.9%.

On a GAAP basis, the company reported earnings per share of $0.35, up 16.7% compared to the year-ago tally. A fall in total costs, along with lower restructuring and asset impairment charges proved conducive to bottom-line growth.

Inside the Headlines

Total revenue in the quarter was $836.6 million, down 0.9% year over year on a reported basis. However, revenues inched up 0.2%, when adjusted for currency impact.

Foreign currency headwinds, absence of revenues from the previously exited operations, as well as dismal performance of the Small and Medium Business offset stellar growth of the Digital Commerce business.

As for the segments, on a reported basis, Small and Medium Business (“SMB”) Solutions revenues dipped 6% year over year to $449 million. The tepid performance was due to softness in the North American Mailing business (down 4%) and International Mailing Business (down 11%). Lower recurring revenue streams and supplies revenues led to the lackluster performance of the North American Mailing business. Additionally, decline in recurring revenues and poor equipment sales proved to be a drag on the International Mailing Business.

Enterprise Business Solutions (“EBS”) revenues climbed 3% year over year to $222 million. Decent performance of the production mail business (up 2%) and Presort Services (up 4%) drove the top-line growth of this segment. Higher inserter and sorter equipment sales bolstered sales of the production mail business. Higher “Standard Class” and “First Class” mail volumes also proved conducive to the growth of this segment.

Digital Commerce Solutions reported 9% year-over-year growth in sales to $166 million, on the back of strong Global e-commerce business (up 17%). Robust volumes in the UK outbound marketplace and growth in overall retail volumes acted as tailwinds for the Global e-commerce business. After several quarters of decline, Software solutions sales remained flat year over year in the reported quarter.

Liquidity and Cash Flow

Exiting the quarter on Mar 31, 2017, free cash flow was $111.2 million compared with $65.1 million as of Dec 31, 2016.

As of Mar 31, 2017, the company’s cash and cash equivalents totaled $739.6 million compared with $764.5 million at the end of Dec 31, 2016. Long-term debt as of Mar 31, 2017, was $2,499.0 million, down from $2,750.4 million as of Dec 31, 2016.

Guidance

The company reiterated its guidance for full-year 2017. It expects earnings per share to lie in the range of $1.70–$1.85. Revenues, on a reported basis, are anticipated to be in the range of a 2% decline to 1% growth, when compared to 2016. Further, the company reaffirmed its free cash flow for 2017 to be in the $400–$460 million range.

On a positive note, Pitney Bowes believes that new products and digital capabilities of SMB, expansion of the Presort Services network and robust e-commerce volume growth will act as major catalysts, stoking top-line growth for full-year 2017. Moreover, the company’s focus on operational excellence will help it trim costs and expenses, thus supplementing growth.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

Pitney Bowes Inc. Price and Consensus

 

Pitney Bowes Inc. Price and Consensus | Pitney Bowes Inc. Quote

VGM Scores

At this time, Pitney Bowes' stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

The stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Pitney Bowes Inc. (PBI) - free report >>

Published in