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Why Did Pitney Bowes Launch SmartLink in Canada?

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Nov. 20 2020, Updated 11:13 a.m. ET

Price movement

Pitney Bowes (PBI) has a market cap of $3.5 billion. It rose 1.2% to close at $17.99 per share on September 12, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -4.9%, -1.6%, and -10.1%, respectively, on the same day.

PBI is trading 3.0% below its 20-day moving average, 2.1% below its 50-day moving average, and 4.3% below its 200-day moving average.

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Related ETF and peers

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 was 19.6% on September 12.

The market caps of Pitney Bowes’s competitors are as follows:

  • Lexmark International (LXK) — $2.3 billion
  • Xerox (XRX) — $10.3 billion
  • Canon–ADR (CAJ) — $38.8 billion

Latest news on Pitney Bowes

In a press release on September 12, 2016, Pitney Bowes reported, “Pitney Bowes, Inc. (PBI), a global technology company that provides innovative products and solutions to power commerce, today announced the launch of the SmartLink device, a digital technology solution that connects postage meters to the Pitney Bowes Commerce Cloud, in Canada to enhance productivity and enable a new range of online services.

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“The SmartLink device leverages a secure Internet of Things (IoT) platform to link physical postage meters to the Pitney Bowes Commerce Cloud, unlocking valuable new benefits, online tools and services. Most notable, these tools and services include automated postage rate updates, low postage alerts, AutoInk technology, usage tracking and analytics, error notifications and simple self-help tutorials, all with 24/7 online account management features.”

Performance of Pitney Bowes in 2Q16

In 2Q16, Pitney Bowes reported total revenue of $835.9 million, a fall of 5.1% from the total revenue of $880.9 million in 2Q15. Revenue from the SMB (Small and Medium Business) Solutions segment fell 8.3%, and revenue from Digital Commerce Solutions rose 10.6% between 2Q15 and 2Q16.

Its net income and EPS (earnings per share) fell to $53.6 million and $0.28, respectively, in 2Q16, compared with $151.8 million and $0.75, respectively, in 2Q15. It reported adjusted EBITDA[1. earnings before interest, taxes, depreciation, and amortization] and adjusted EPS of $199.4 million and $0.39, respectively, in 2Q16, a fall of 10.4% and 13.3%, respectively, from 2Q15.

Pitney Bowes’s cash and cash equivalents and inventories rose 3.9% and 25.0%, respectively, between 4Q15 and 2Q16. Its current ratio rose to 1.1x in 2Q16 from 1.0x in 4Q15.

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Quarterly dividends

Pitney Bowes declared the following dividends:

  • a quarterly cash dividend of $0.53 per share on its $2.12 convertible preference stock to be paid on October 3, 2016, to shareholders of record on September 15, 2016
  • a quarterly cash dividend of $0.50 per share on its 4% convertible cumulative preferred stock to be paid on November 1, 2016, to shareholders of record on October 15, 2016

Projections

Pitney Bowes (PBI) made the following projections for fiscal 2016:

  • revenue growth in the range of -1% to -3% on a constant currency basis
  • adjusted EPS in the range of $1.75–$1.82
  • free cash flow in the range of $400 million–$450 million
  • annual tax rate in the range of 33%–35%

The company made the following projections for fiscal 2H16:

  • revenue growth in the range of 2% to -2% on a constant currency basis
  • adjusted EPS in the range of $1.03–$1.10
  • free cash flow in the range of $254 million–$304 million

For an ongoing analysis of this sector, please visit Market Realist’s Consumer Discretionary page.

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