Pitney Bowes Inc. PBI recently announced the acquisition of the presort operations of Miller’s Presort in Cleveland. The buyout will enable the company to assist high-volume mailers of the Cleveland area in reducing postage cost as well as manage compliance challenges. The overall value of the deal has been kept under wraps.
Pitney Bowes Presort Services, the largest certified work-share partner of the USPS, already has a strong national network of more than 35 operating centers. The company believes this buyout, along with Presort Service’s operational expertise and state-of-the-art technology will enable it to offer excellent value and service to several successful banks and insurers, as well as healthcare companies globally.
Besides expanding national network, the company is also expanding services. For instance, the company is enhancing the value of direct mail clients by optimizing their messages and offerings for digital channels. Moreover, the company is rolling out parcel mailing solutions based on its expertise in mail sortation.
Despite expanding and improving business networks to drive growth, the shares of Pitney Bowes have had a disappointing run on the bourse in the last six months. Its shares have declined 32.6%, in sharp contrast to the industry’s growth of 10.1%.
The fact remains that softness in the company’s North American mailing business is yet to subside fully. Lower recurring revenue streams and lower sales in the top of the line products are leading to the lackluster performance of the North American Mailing business. Additionally, decline in recurring revenues remains a concern for the International Mailing Business. Further, the company experienced few issues related with start-up system stability with its domestic shipping APIs in its in Global Ecommerce business.
This apart, uncertain global economic environment is expected to impact production mail and software businesses in the near term, consequently limiting the company’s growth momentum. Further, as the Zacks Rank #5 (Strong Sell) company continues to transform its portfolio and make necessary investments to boost sales, it anticipates pressure on margins in the short term.
Stocks to Consider
Some better-ranked stocks from the same space include Canon, Inc. CAJ, Advanced Energy Industries, Inc. AEIS and AMTEK, Inc. AME. While Canon sports a Zacks Rank #1 (Strong Buy), Advanced Energy Industries and AMTEK carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Canon has surpassed estimates twice in the trailing four quarters, with an average positive earnings surprise of 17.9%.
Advanced Energy Industries has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 13.5%.
AMTEK has outpaced estimates thrice in the preceding four quarters, with an average earnings surprise of 4.1%.
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