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Why Pitney Bowes Stock Jumped 51% in January

By Demitri Kalogeropoulos - Feb 5, 2021 at 9:44AM

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Investors were betting on a strong holiday quarter outing for the parcel delivery specialist.

What happened

Pitney Bowes (PBI 2.48%) shareholders outperformed the market by a wide margin last month. Shares soared 51% in January compared to a 1% downtick in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally added to significant short-term gains for the parcel delivery specialist, whose stock was up over 50% in 2020.

A delivery man drops off several boxes at a home.

Image source: Getty Images.

So what

Last month's spike came as investors were gearing up for a potentially strong fiscal fourth-quarter earnings report set for early February. Pitney Bowes' sales benefit from increasing e-commerce demand, and Wall Street was betting that this trend would lift its holiday results. Shares may have also been caught up in the short squeeze craze that sent several stocks surging last month. In fact, Pitney Bowes' stock slumped on February 2 despite its having just announced surprisingly strong sales results.

Now what

Pitney Bowes is targeting another year of sales growth following an 11% increase in 2020. The company still hasn't found a way to generate sustainably strong earnings or cash flow, though, and it holds significant debt. As a result, I wouldn't expect the stock to be a strong performer from here, so investors might want to look at other growth stocks as buy candidates.

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Stocks Mentioned

Pitney Bowes Inc. Stock Quote
Pitney Bowes Inc.
PBI
$4.75 (2.48%) $0.12

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