Can Pitney Bowes (PBI) Surprise This Earnings Season?
Pitney Bowes Inc. (PBI) is set to report its first-quarter 2014 results on Apr 30. The company delivered a positive surprise of 20.45% in the last quarter. It also posted an average positive earnings surprise of 19.5% over the past 4 quarters, beating the Zacks Consensus Estimate in 3 of the last 4 quarters. Let’s consider some important factors that may affect the upcoming results.
Growth Factors in the Past Quarter
Pitney Bowes has been taking strategic initiatives to improve its infrastructure, productivity and profitability. Moreover, significant working capital improvements and a diligent operational execution plan position the company to achieve its aim of reducing its costs by about $100 million to $125 million by 2015.
Since May 2013, the company is also benefiting from its novel business model, as is evident from the overall revenues and earnings before tax and interest (:EBIT) improvement in the last few quarters.
In March, the company collaborated with IBM Corp. (IBM) for enhancing its hybrid cloud location services. Pitney Bowes will be providing location intelligence solutions for IBM’s novel platform-as-a-service, BlueMix.
Prior to this, Pitney Bowes revealed its decision to strengthen its big data solutions by providing additional applications with its existing Spectrum Technology Platform. The integrated platform will now be able to provide its clients with advanced analytic solutions and master data management (MDM) with the aid of graphical presentations.
Pitney Bowes is also focused on scaling up its investment in the digital commerce business. The digital commerce business is performing impressively well, driven by the increased demands for the e-commerce solutions. In the last reported quarter, the company saw 18% growth in this business while its e-commerce solutions alone grew in double digits on a sequential basis. The company has aligned its priorities to tap the potential of this $40 billion market.
The company’s plan to stabilize its mailing business and its efforts to broaden its presence in the big data and analytics industry, which has an immense potential, are likely to benefit the company significantly going forward.
Further, the company’s strategic transformation program, designed to create long-term flexibility to invest in future growth, reinforces our optimism.
Earnings Whispers?
Our proven model does not conclusively show that Pitney Bowes is likely to beat estimates this quarter. This is because a stock needs to have both positive Earnings ESP and Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below:
Zacks ESP: The Earnings ESP for Pitney Bowes is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $0.39 per share.
Zacks Rank: Pitney Bowes’s Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
ON Semiconductor Corp. (ONNN), with Earnings ESP of +6.67% and a Zacks Rank #1 (Strong Buy).
Orbitz Worldwide, Inc. (OWW), with Earnings ESP of +100.00% and a Zacks Rank #2 (Buy).
United Rentals, Inc. (URI), with Earnings ESP of +0.69% and a Zacks Rank #1 (Strong Buy).
Read the Full Research Report on PBI
Read the Full Research Report on OWW
Read the Full Research Report on IBM
Read the Full Research Report on ONNN
Read the Full Research Report on URI
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