Don't let it get away!
Keep track of the stocks that matter to you.
Help yourself with the Fool's FREE and easy new watchlist service today.
Investing isn't easy. Even Warren Buffett counsels that most investors should invest in a low-cost index like the S&P 500. That way, "you'll be buying into a wonderful industry, which in effect is all of American industry," he says.
But there are, of course, companies whose long-term fortunes differ substantially from the index. In this series, we look at how individual stocks have performed against the broad S&P 500.
Step on up, Pitney Bowes (NYSE: PBI ) .
Pitney Bowes shares have underperformed the S&P 500 over the past quarter-century:
Since 1987, shares have returned an average of 5.1% a year, compared with 9.7% a year for the S&P (both include dividends). One thousand dollars invested in the S&P in 1987 would be worth $19,200 today. In Pitney Bowes, it'd be worth $4,900.
Dividends accounted for a lot of those gains. Compounded since 1987, dividends have made up 86% of Pitney Bowes' returns. For the S&P, dividends account for 39% of total returns.
Now have a look at how Pitney Bowes earnings compare with S&P 500 earnings:
Deep underperformance here, too. Since 1995, Pitney Bowes' earnings per share have grown by an average of 2.8% a year, compared with 6% a year for the broader index.
What's that meant for valuations? Pitney Bowes has traded for an average of 18 times earnings since 1987 -- below the 24 times earnings for the broader S&P 500.
Through it all, shares have been poor performers over the past quarter-century.
Of course, the important question is whether that will continue. That's where you come in. Our CAPS community currently ranks Pitney Bowes with a two-star rating (out of five). Care to disagree? Leave your thoughts in the comment section below, or add Pitney Bowes to My Watchlist.
The amount of data we store every year is growing by a mind-boggling 60% annually! To make sense of this trend and pick out a winner, The Motley Fool has compiled a new report called "The Only Stock You Need to Profit From the NEW Technology Revolution." The report highlights a company that has gained 300% since first recommended by Fool analysts but still has plenty of room left to run. Thousands have requested access to this special free report, and now you can access it today at no cost. To get instant access to the name of this company transforming the IT industry, click here -- it's free.