A month has gone by since the last earnings report for Pitney Bowes (PBI). Shares have added about 75.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Pitney Bowes 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 Q2 Earnings Top Estimates, Revenues Up Y/Y
Pitney Bowes reported second-quarter 2020 adjusted earnings of 4 cents per share, beating the Zacks Consensus Estimate by 100%. Nevertheless, the figure declined 78.9% year over year.
Total revenues improved 6% year over year to $837.5 million. Adjusting for foreign currency exchange and market exit impact, revenue growth was 7% year over year.
Quarter in Detail
Commerce Services increased 26% (up 26% after adjusted for currency) from the year-ago quarter’s figure to $516.6 million. Global Ecommerce revenues rose 41% to $398.5 million, while Presort Services of $118.1 million declined 8% year over year.
Global Ecommerce revenues benefited from strong growth in Domestic Parcel Delivery services and Digital Delivery volumes. Presort Services revenues declined due to sluggishness in marketing Mail and First Class volumes. However, Mail Flats and Bound Printed Matter volumes grew year over year and limited the decline.
Sending Technology Solutions declined 15% year over year (down 15% after adjusted for currency) to $320.9 million. The downside was caused by COVID-19 induced supply chain disruptions and lower equipment sales. However, higher business service revenues, driven by increased usage of shipping offerings and capabilities, limited the decline.
Adjusted EBITDA Details
In the second quarter, adjusted EBITDA declined 25.8% from the year-ago quarter’s figure to $89.5 million.
Segment EBITDA fell 18% from the year-ago quarter’s figure to $131.9 million. Segment EBIT slumped 21% from the year-ago quarter’s figure to $98 million.
Balance Sheet & Cash Flow
As of Jun 30, 2020, cash and cash equivalents (including short-term investments) were $1.02 billion compared with $730.3 million as of Mar 31, 2020.
As of Jun 30, 2020, long-term debt (including current portion) was $2.72 billion, compared with $2.63 billion as of Mar 31, 2020.
Cash flow generated was $153.1 million compared with $66.3 million of net cash used in operations in the previous quarter. Free cash flow was $148.4 million compared with free cash outflow of $47.4 million in the prior quarter.
In the reported quarter, Pitney Bowes paid out dividends worth $9 million.
The company incurred expenses of $5 million under restructuring payments and capital expenditures worth $34 million in the reported quarter.
The company refrained from providing guidance for 2020 due to uncertainties related to the COVID-19 outbreak and its negative impact on consumer demand and supply chains.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -37.5% due to these changes.
Currently, Pitney Bowes has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Pitney Bowes has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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