Although we don't believe in timing the market or panicking over
market movements, we do like to keep an eye on big changes -- just in case
they're material to our investing thesis.
What: Shares of mail processing equipment and mail solutions provider Pitney
Bowes (NYS: PBI) received a stamp of disapproval from
shareholders this morning and fell as much as 10% after the company reported
its first-quarter results.
So what: It really wasn't as poor a quarter as everyone had expected, but then
again, there's not much to look forward to nowadays when the U.S. Postal
Service is a large customer of Pitney Bowes. For the quarter, Pitney Bowes'
revenue fell slightly to $1.26 billion from the year earlier while EPS came in
at $0.52. It was a mixed report where revenue failed to live up to expectations, but its adjusted
profit did beat the consensus figure by $0.02. Other than software, all
business segments showed a year-over-year decline in revenue. Pitney Bowes also
left its full-year forecast unchanged and still expects revenue to be in the
plus-or-minus 2% range and EPS to range between $2.05 and $2.25.
Now what: Pitney Bowes has become a total value investors' stock over the past
few years. Growth in the mail industry has dried up as communication has
switched to a digital platform, making it increasingly hard for Pitney Bowes to
grow its business. In response to this weakened growth, the company has turned
to hefty dividends to keep its shareholders happy. Now the question has become:
Is it really worth suffering through little to no growth to receive just shy
of a 10% dividend yield? With the long-term trend pointing away from standard
mail, I'm inclined to say no and would opt for a REIT or MLP if I wanted the
safety of a yield that large. The days of Pitney as a growth stock are long
gone, and so is my interest in the company.
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