Why Pitney Bowes Shares Plunged

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of metered mail king Pitney Bowes (NYSE: PBI  ) sank 14% today after its quarterly results and guidance disappointed Wall Street.

So what: The company's weak third-quarter results -- earnings fell to $76.5 million from $172.8 million in the year-ago period while revenue declined 6.5% -- coupled with downbeat guidance for the full year reinforces concerns over its growth opportunities going forward. Management blamed the weak global economy for the miss, but the persistent trend away from traditional mail toward cheaper and faster forms of communication (email, fax, etc.) is what really concerns Wall Street about the business model.

Now what: Management now sees full-year EPS from continuing operations of $1.95 to $2.15, down significantly from a prior view of $2.12 to $2.32. "We continue to take actions to drive sustainable long-term growth for Pitney Bowes and our shareholders," Chairman and CEO Murray Martin reassuredinvestors. "As we focus on the higher growth opportunities, we are growing our participation in e-commerce opportunities related to cross border parcel shipping services." Given just how rapidly the market landscape is shifting, however, I'd remain cautious about buying into that optimism.

Interested in more info on Pitney Bowes? Add it to your watchlist.

Fool contributor Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Brian D. Pacampara, CFA

Brian has been writing for The Fool since 2006, and currently covers consumer goods stocks. He has a B.A. from Western University (Ontario, Canada) and holds the CFA designation.

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Related Tickers

5/23/2016 4:02 PM
PBI $17.84 Down -0.06 -0.34%
Pitney Bowes, Inc. CAPS Rating: ***