What happened

Shares of postal solutions provider Pitney Bowes (NYSE:PBI) -- down 56% over the past 12 months -- reversed course abruptly this morning after the company reported fiscal second-quarter 2019 earnings.

Expected to earn $0.17 per share on sales of $861.6 million, Pitney instead reported a $0.21 per-share "adjusted" profit for the quarter.  

Pitney Bowes stock is now up 15.2% as of 12:40 p.m. EDT in response.

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Image source: Getty Images.

So what

And perhaps rightly so. After all, the company did "beat" earnings -- even if the quarter wasn't quite an unalloyed success.

For one thing, sales of $860.8 million in the quarter actually fell slightly short of analyst guidance. And of course, the $0.21 in "profit" that Pitney Bowes earned wasn't actual profit as calculated according to generally accepted accounting principles (GAAP), but rather pro forma, adjusted to back out such supposedly "one-time items" as restructuring charges and asset impairments. Actual GAAP results for the quarter were only $0.13 per share -- down more than half from the $0.27 per share, GAAP, that Pitney earned in Q2 2018.

Nevertheless, the results seem to have been good enough for investors, and good enough for Pitney Bowes as well. CEO Marc Lautenbach pronounced himself "pleased with our overall performance in the second quarter," citing a 42% increase in "parcel volumes through our domestic e-commerce network" as a specific success during the quarter.

Now what

Investors should be similarly pleased with Lautenbach's latest guidance for the rest of this year. Instead of the $0.88 per share that Wall Street has been expecting, the CEO predicted that "adjusted EPS from continuing operations [this year will] be in the range of $0.90 to $1.05."

He also held forth the promise of free cash flow ranging from $200 million to $250 million this year, so potentially a reversal of the four straight years of declining free cash flow Pitney Bowes investors have endured to date.  

All in all, it was a promising report -- and today, Pitney Bowes shareholders are reaping the rewards for that.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.