Shares of Pitney Bowes (PBI), which offers mailing products and services, rose sharply out of the gate on Thursday, gaining a huge 24% in the first few minutes of the trading day. The news driving that gain was the company's first-quarter 2021 earnings update. It wasn't all good, but there was clearly plenty of upbeat information as far as investors were concerned.
Pitney Bowes' sales totaled $927 million in the quarter, up roughly 1% from the first quarter of 2021. That's a modest increase, to be sure, but two of its three divisions (representing just over 60% of revenue) reported sales gains, so there was notable strength in the business. And the lone weak spot, the SendTech Solutions division, only witnessed a 3% top-line drop. It was hardly a bad quarter from a big-picture perspective.
On the bottom line, Pitney Bowes' adjusted earnings came in at $0.08 per share in the first quarter of 2021, up from $0.07 last year. Analysts had been looking for earnings of just $0.03 per share, so the company handily beat Wall Street's expectations. Investors tend to like that type of thing.
And notably, Pitney Bowes actually managed to improve its margins for earnings before interest, taxes, depreciation, and amortization (EBITDA) in the Global Ecommerce division, its largest operation at around 45% of sales. While inflation and mix were restraining factors in the rest of the business, e-commerce is a key focus for management, and the operational strength in this division is nice to see.
Given the global backdrop, Pitney Bowes appears to have put up a decent set of quarterly numbers -- not perfect by any stretch of the imagination, but clearly better than what investors had been expecting.
The bigger issue here, however, is that Pitney Bowes is really a turnaround stock as it looks to become a major partner for those seeking to grow their online businesses. It hasn't been a smooth or quick process, so long-term investors shouldn't make a judgment call here based on a single quarter, despite today's massive stock advance. At the end of the day, this is one stock that's still probably best left to more aggressive investors.