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After a Mediocre 2015, How Does Pitney Bowes’ 2016 Look?

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Price movement of Pitney Bowes

Pitney Bowes (PBI) has a market capitalization of $3.3 billion. PBI fell by 0.95% to close at $16.66 per share as of February 9, 2016. The stock’s price movements on a weekly, monthly, and year-to-date (or YTD) basis are -0.54%, -11.1%, and -19.3%, respectively.

Technically, the stock has broken its support and is trading below all of its moving averages. Currently, PBI is trading 9.4% below its 20-day moving average, 14.8% below its 50-day moving average, and 18.8% below its 200-day moving average.

The ALPS Sector Dividend Dogs ETF (SDOG) invests 2.1% of its holdings in Pitney Bowes. The ETF tracks an equal-weighted index of the five highest-yielding S&P 500 securities in each sector. The YTD price movement of SDOG is -4.9% as of February 8, 2016.

The market capitalizations of Pitney Bowes’ competitors are as follows:

  • Xerox (XRX) — $8.9 billion
  • Canon (CAJ) — $37.8 billion
  • International Business Machines (IBM) — $120.4 billion
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Pitney Bowes declares dividend

Pitney Bowes has declared a quarterly cash dividend of $0.19 per share on its common stock. The dividend will be paid on March 12, 2016, to shareholders on record as of February 19, 2016. PBI has also declared a quarterly cash dividend of $0.53 per share on its $2.12 convertible preference stock, which will be paid on April 1, 2016, to shareholders on record as of March 15, 2016. Finally, it has declared a quarterly cash dividend of $0.50 per share on its 4% convertible cumulative preferred stock, which will be paid on May 1, 2016, to shareholders on record as of April 15, 2016.

The company has also authorized the repurchase of an additional $150 million of its common stock, to be completed in 2016. It expects to repurchase $215 million worth of its common stock in 2016 and has already repurchased $54 million as of February 8, 2016.

Performance of Pitney Bowes in 4Q15 and 2015

Pitney Bowes reported 4Q15 total revenues of $936.9 million, a fall of 4.8% compared to net sales of $983.9 million in 4Q14. Revenues from its small and medium and enterprise business solutions fell by 6.4% and 1.8%, respectively, and revenues from its digital commerce solutions rose by 11.1% in 4Q15 compared to 4Q14.

PBI’s net income and EPS (earnings per share) rose to $86.3 million and $0.44, respectively, in 4Q15 compared to $62.5 million and $0.31, respectively, in 4Q14. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $231.1 million in 4Q15, a fall of 9.5% compared to 4Q14.

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2015 results

In 2015, PBI reported total revenues of $3,578.1 million, a fall of 6.4% YoY (year-over-year). The company’s net income and EPS rose to $407.9 million and $2.03, respectively, in 2015, compared to $333.8 million and $1.64, respectively, in 2014.

Meanwhile, its cash and cash equivalents fell by 37.2%, and its inventories rose by 4.7% in 2015. Its current ratio fell to 1.0 in 2015 compared to 1.2 in 2014.

The PE (price-to-earnings) and PS (price-to-sales) ratios of Pitney Bowes are 8.3x and 0.92x, respectively, as of February 9, 2016.

Projection

The company has made the following projections for 2016:

  • Revenue growth on a constant currency basis in the range of -1%–2%
  • EPS from continuing operations in the range of $1.80–$2.00 on both an adjusted and GAAP (generally accepted accounting principles) basis, not including any potential adjustments to earnings
  • Free cash flow in the range of $425–$525 million
  • Tax rate in the range of 32%–35%
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