Three months after a report of strong sales but weak profits knocked shares of Pitney Bowes (NYSE:PBI) for a 10% loop in Q1, it looked like Q2 would be a repeat. In early trading Wednesday, shares of the postal services facilitator were once again down 10% after the company reporting its second-quarter results. Fortunately for investors, the stock pulled up at the end, and Pitney ended the day with "only" a 7.6% loss.
This time, earnings weren't the problem -- or not the biggest problem, at least. The $0.26 per share that Pitney Bowes reported earning for Q2 2018 precisely matched the $0.26 profit that Wall Street had predicted. Sales, however, came in a bit weak at $861.4 million, below estimates.
"Missing sales" is therefore probably part of the reason Pitney Bowes stock suffered today. But I suspect investors weren't particularly thrilled with the earnings number, either, even if it did meet expectations.
The reason is that, while Pitney grew its sales 18% year over year, it didn't grow its profits at all. That is, $0.26 wasn't just exactly what Wall Street had thought the company would earn. It was also exactly what the company earned one year ago -- so zero growth.
Of course, the worst news of all is that Pitney Bowes probably won't even achieve zero growth for the year. The company's latest guidance calls for Pitney's sales growth to slow to between 11% and 15% for the full year. Management didn't give GAAP guidance for earnings, but said its "adjusted" profits will be only $1.15 to $1.30 per share.
Assuming those results bear any resemblance to Pitney's actual GAAP results, that suggests a steep decline from the $1.39 per share it earned last year.