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Why Is Pitney Bowes (PBI) Up 3.3% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Pitney Bowes Inc. (PBI - Free Report) . Shares have added about 3.3% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Pitney Bowes Misses on Q4 Earnings, Trims Guidance
Pitney Bowes reported fourth-quarter 2016 adjusted earnings of $0.53 per share, which missed the Zacks Consensus Estimate of $0.58 by 8.6%. However, on a year-over-year basis, adjusted earnings improved 10.4%.
For full-year 2016, the company’s adjusted earnings per share fell 4.0% to $1.68 compared to the year-ago tally. Notably, the company’s adjusted earnings fell short of the guided range of $1.75–$1.82 per share.
On a GAAP basis, the company incurred net loss per share of $0.44, comparing unfavorably with the year-ago net earnings of $0.41. Factors including goodwill impairment charge, restructuring and asset impairment charge, and redemption of the preferred stock of the company’s PBIH subsidiary hurt the bottom line.
Inside the Headlines
Total revenue in the quarter was $887.1 million, down 5.3% year over year on a reported basis. In addition, revenues were down 4%, when adjusted for the impact of currency and market exits.
Poor top-line performance during the quarter under review was largely attributable to foreign currency headwinds. Also, absence of revenues from the previously exited operations in Mexico, South Africa and five markets in Asia aggravated the decline in revenues. Furthermore, weak sales across all three segments of the company added to Pitney Bowes’ woes.
For full-year 2016, the company’s sales totaled $3.4 billion, a fall of 5% on a reported basis and 4% when adjusted for both the impact of currency and market exits, compared to 2015.
As for the segments, on a reported basis, Small and Medium Business (“SMB”) Solutions revenues dipped 7% year over year to $442 million. Softness in North American Mailing business (down 16%) and International Mailing Business (also down 16%) were attributable to the poor performance. Lower financing and supplies revenues, and weakness in equipment sales led to dismal performance of the North American Mailing business. Additionally, decline in recurring revenues proved to be a drag on International Mailing Business.
EnterpriseBusiness Solutions (“EBS”) revenues were down 5% year over year at $233 million. Robust performance of the production mail business (up 11 %) was more than offset by the fall of Presort Services revenues (down 6%). Lower “First Class” mail and lower volume of average revenue per piece of mail processed, proved to be a drag on the performance of Presort Services.
The Digital Commerce Solutions reported 2% year-over-year decline in sales to $212 million. A fall in sales from Software solutions (down 10%) more than offset a rise in sales from the global e-commerce business (up 12%), thereby leading to an overall decline. The Software solutions sales took a beating on account of anticipated large deals which did not come to fruition during the quarter.
Liquidity and Cash Flow
Exiting the quarter on Dec 31, 2016, free cash flow was $164.2 million compared with $156.9 million as of Dec 31, 2015.
As of Dec 31, 2016, the company’s cash and cash equivalents totaled $771.0 million compared with $650.6 million at the end of Dec 31, 2015. Long-term debt as of Dec 31, 2016, was $2,750.4 million, up from $2,489.6 million as of Dec 31, 2015.
Lukewarm Guidance
The company offered its guidance for full-year 2017.It slashed its 2017 adjusted earnings per share guidance to $1.70–$1.85 from the previous guided range of $1.80–$1.95. Revenues, on a reported basis, are expected to be in the range of a 2% decline to 1% growth, when compared to 2016. Further, the company revised its free cash flow to be in the range of $400–$460 million, compared to the earlier guided range of $415–$485 million.
On a positive note, Pitney Bowes believes that new products and digital capabilities of SMB, expansion of the Presort Services network and robust ecommerce volume growth will act as major catalysts, stoking top-line growth for full-year 2017. Moreover, its focus on operational excellence will help it trim cost and expense, 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.
At this time, Pitney Bowes' stock has a nice Growth Score of 'B', however its Momentum is lagging a lot with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile 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.
Based on our scores, the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting inline return from the stock in the next few months.
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Why Is Pitney Bowes (PBI) Up 3.3% Since the Last Earnings Report?
It has been about a month since the last earnings report for Pitney Bowes Inc. (PBI - Free Report) . Shares have added about 3.3% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Pitney Bowes Misses on Q4 Earnings, Trims Guidance
Pitney Bowes reported fourth-quarter 2016 adjusted earnings of $0.53 per share, which missed the Zacks Consensus Estimate of $0.58 by 8.6%. However, on a year-over-year basis, adjusted earnings improved 10.4%.
For full-year 2016, the company’s adjusted earnings per share fell 4.0% to $1.68 compared to the year-ago tally. Notably, the company’s adjusted earnings fell short of the guided range of $1.75–$1.82 per share.
On a GAAP basis, the company incurred net loss per share of $0.44, comparing unfavorably with the year-ago net earnings of $0.41. Factors including goodwill impairment charge, restructuring and asset impairment charge, and redemption of the preferred stock of the company’s PBIH subsidiary hurt the bottom line.
Inside the Headlines
Total revenue in the quarter was $887.1 million, down 5.3% year over year on a reported basis. In addition, revenues were down 4%, when adjusted for the impact of currency and market exits.
Poor top-line performance during the quarter under review was largely attributable to foreign currency headwinds. Also, absence of revenues from the previously exited operations in Mexico, South Africa and five markets in Asia aggravated the decline in revenues. Furthermore, weak sales across all three segments of the company added to Pitney Bowes’ woes.
For full-year 2016, the company’s sales totaled $3.4 billion, a fall of 5% on a reported basis and 4% when adjusted for both the impact of currency and market exits, compared to 2015.
As for the segments, on a reported basis, Small and Medium Business (“SMB”) Solutions revenues dipped 7% year over year to $442 million. Softness in North American Mailing business (down 16%) and International Mailing Business (also down 16%) were attributable to the poor performance. Lower financing and supplies revenues, and weakness in equipment sales led to dismal performance of the North American Mailing business. Additionally, decline in recurring revenues proved to be a drag on International Mailing Business.
EnterpriseBusiness Solutions (“EBS”) revenues were down 5% year over year at $233 million. Robust performance of the production mail business (up 11 %) was more than offset by the fall of Presort Services revenues (down 6%). Lower “First Class” mail and lower volume of average revenue per piece of mail processed, proved to be a drag on the performance of Presort Services.
The Digital Commerce Solutions reported 2% year-over-year decline in sales to $212 million. A fall in sales from Software solutions (down 10%) more than offset a rise in sales from the global e-commerce business (up 12%), thereby leading to an overall decline. The Software solutions sales took a beating on account of anticipated large deals which did not come to fruition during the quarter.
Liquidity and Cash Flow
Exiting the quarter on Dec 31, 2016, free cash flow was $164.2 million compared with $156.9 million as of Dec 31, 2015.
As of Dec 31, 2016, the company’s cash and cash equivalents totaled $771.0 million compared with $650.6 million at the end of Dec 31, 2015. Long-term debt as of Dec 31, 2016, was $2,750.4 million, up from $2,489.6 million as of Dec 31, 2015.
Lukewarm Guidance
The company offered its guidance for full-year 2017.It slashed its 2017 adjusted earnings per share guidance to $1.70–$1.85 from the previous guided range of $1.80–$1.95. Revenues, on a reported basis, are expected to be in the range of a 2% decline to 1% growth, when compared to 2016. Further, the company revised its free cash flow to be in the range of $400–$460 million, compared to the earlier guided range of $415–$485 million.
On a positive note, Pitney Bowes believes that new products and digital capabilities of SMB, expansion of the Presort Services network and robust ecommerce volume growth will act as major catalysts, stoking top-line growth for full-year 2017. Moreover, its focus on operational excellence will help it trim cost and expense, 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', however its Momentum is lagging a lot with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile 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.
Based on our scores, the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting inline return from the stock in the next few months.