Please ensure Javascript is enabled for purposes of website accessibility

Why Pitney Bowes Stock Dropped 8% on Thursday

By Rich Smith – May 30, 2019 at 2:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors deny Pitney Bowes their "stamp" of approval following a disappointing "investor day."

What happened

Shares of postal-solutions provider Pitney Bowes (PBI 9.05%) plunged more than 9% in early Thursday trading before clawing its way back to "only" about an 8% decline as of 3 p.m. EDT. With no other news about the company today, an investor can only presume that revelations from the "investor day" that Pitney Bowes held on Wednesday, May 29 are to blame.

Various postmarked stamps.

Image source: Getty Images.

So what

What was it that Pitney Bowes said yesterday that got investors so upset? It's not easy to be certain. A PowerPoint presentation of the information Pitney Bowes presented yesterday stretches to 130 pages in length -- a veritable mountain-sized haystack through which to search to find the culprit needles. That being said, here are a few numbers that "stuck" out.

According to S&P Global Market Intelligence estimates, analysts are forecasting a return to revenue growth at Pitney Bowes as early as this year and strong sales growth near 5% in 2020, followed by better than 4% sales gains in 2021. Earnings growth is expected to resume in 2020, with free cash flow growth one year later.

Now what

Pitney Bowes' presentation, however, suggests the turnaround might take even longer than that. One page toward the end of the PowerPoint appears to suggest flat or even declining sales in 2019, for example, with approximately 5% sales growth perhaps taking until 2022 to emerge. The same holds true for free cash flow. Despite analysts' expectations that free cash flow will resume in 2021, Pitney Bowes clearly states, "Free Cash Flow will Return to Year-Over-Year Growth in 2022" -- one year behind schedule.

While I can't say for certain that these are the numbers worrying investors today, I can't say I'd blame them if that's the case.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Pitney Bowes Inc. Stock Quote
Pitney Bowes Inc.
$2.65 (9.05%) $0.22

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.