Pitney Bowes Inc. (PBI) is slated to release its fourth-quarter 2011 earnings result on Thursday, February 9, 2012. The current Zacks Consensus Estimate for fourth-quarter earnings per share (EPS) is 60 cents, representing an annualized decline of 9.09%. For full-year 2011, the Zacks Consensus Estimate is $2.31, representing an annualized growth of 3.59%.
Pitney’s earnings were above the Zacks Consensus Estimate in the last quarter while was in line in the second quarter and first quarter of 2011. In fourth-quarter 2011, earnings per share were above estimate. The company’s average positive earnings surprise was 17.99%.
Third Quarter Highlights
Pitney Bowes reported third-quarter 2011 earnings per share from continuing operations of 69 cents, above the Zacks Consensus Estimate of 54 cents and prior-year earnings of 55 cents.
The earnings in the quarter benefited $0.05 per diluted share from insurance reimbursements and $0.08 per diluted share from IRS tax settlement. In the previous two quarters, the company’s earnings suffered from loss due to the fire at the company’s Dallas presort facility, which was offset by the insurance reimbursements in the third quarter.
Total revenue was $1.3 billion, down 3% y/y as a result of a fall in equipment sales and business services revenue resulting from rising global economic uncertainty, partially offset by a rise in software revenue. Foreign currency effect benefited revenue by 2%.
Agreement of Estimate Revisions
In the last 30 days, of the analysts providing estimates on the stock, none changed their estimate for the fourth quarter or for full-year 2011 and 2012.
Magnitude of Estimate Revisions
In the last 7 days, there was no change in earnings estimate for the fourth quarter, first-quarter 2012, full-year 2011 or full-year 2012. In last 30 days also, the estimates remained unchanged, except for first quarter 2012, for which the estimate increased from 49 cents to 50 cents.
Our Take
The company’s result in the third quarter suffered from the prevailing global economic slowdown, which is a matter of concern. This resulted in the decline in PBI’s 2011 revenue growth expectation.
However, Pitney’s Strategic Transformation initiative, which provided improvements in customer processes and infrastructure, cost savings, as well as offered an enhanced ability to deliver new products and services, is a benefactor for the company. Currently, it is targeting annualized benefits from strategic transformation initiatives in the range of $150 to $200 million by the end of 2011 and expects to achieve the full annualized run rate of benefits in 2012.
Significant investment in research and development operations differentiates Pitney Bowes from its competitors. The company has many research and development programs that are directed toward developing new products and service offerings.
Pitney Bowes Inc. was incorporated in the state of Delaware on April 23, 1920, as Pitney Bowes Postage Meter Company. The company is the largest provider of mail processing equipment and integrated mail solutions in the world. A major competitor of Pitney Bowes is Siemens Inc. (SI).
We currently maintain our Neutral rating on Pitney Bowes Inc. with a Zacks #4 Rank (short-term Sell recommendation) over the next one-to-three months.
PITNEY BOWES IN (PBI): Free Stock Analysis Report
SIEMENS AG-ADR (SI): Free Stock Analysis Report
