Factors Setting the Tone for Pitney Bowes’ (PBI) Q4 Earnings

Pitney Bowes Inc. PBI is set to report fourth-quarter 2018 results on Feb 5.

Notably, the company beat the Zacks Consensus Estimate in the trailing four quarters, recording average positive surprise of 6.6%.

In the last reported quarter, revenues increased 14% year over year to $836.9 million. Excluding favorable foreign currency exchange impact of $4 million, revenues increased 13.5% to $832.8 million.

The company delivered adjusted earnings of 27 cents per share that beat the Zacks Consensus Estimate by a couple of cents but decreased 18.2% year over year.

The Zacks Consensus Estimate for earnings is pegged at 40 cents per share, flat on a year-over-year basis, for the to-be-reported quarter.

Let’s see how things are shaping up for the upcoming announcement.

Factors Likely to Influence Q4 Results

Pitney Bowes’ Global Ecommerce business continues to be one of the strongest growth drivers. Notably, Global Ecommerce revenues soared almost 119% to $233 million in the last reported quarter. The segment benefited from 10% revenue growth (on a pro forma basis) in Newgistics on the back of strong performance in parcel and fulfillment volumes.

Notably, Global Ecommerce revenues grew 19% year over year, excluding Newgistics.

Further, constant introduction of new products is expected to bolster the performance of its North America Small & Medium Business Solutions and Production Mail.

In the quarter under review, the company introduced the new Pitney Bowes Spectrum Screener, a screening solution to enhance identity verification of customers and automate other compliance regulations. The tool can be leveraged by financial institutions to reduce costs.

We believe incremental adoption of company’s expanding range of digital commerce solutions will drive top-line growth in the to-be-reported quarter.

Additionally, management anticipates improvement within the Presort Services as the company expands network to focus on development of the parcel sortation side of the business.

Moreover, strength in Pitney Bowes’ Commerce Cloud platform aimed at enhancing digital capabilities and web-based solutions, is anticipated to favor growth prospects.

However, the pricing and functionalities of Salesforce CRM Commerce Cloud, IBM Commerce On Cloud, Oracle ORCL Commerce Cloud, among other similar solutions, are likely to have an impact on adoption rate of Pitney Bowes’ Commerce Cloud solution which might exert pressure on margins.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Pitney Bowes has a Zacks Rank #3 and an Earnings ESP of 0.00%. This makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stock that Warrants a Look

Here is a stock you may consider, as our proven model shows that it has the right combination of elements to post an earnings beat this quarter.

Archer Daniels Midland Company ADM has an Earnings ESP of +2.45% and a Zacks Rank #1. The company is slated to report fourth-quarter 2018 earnings on Feb 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

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