What's In The Cards For Pitney Bowes (PBI) In Q3 Earnings?

Premium ecommerce solutions provider, Pitney Bowes Inc. (NYSE:PBI) is slated to release third-quarter 2017 results before the opening bell on Nov 1.

Last quarter, the company reported earnings of 33 cents, exhibiting a miss of 8.3%. Overall, Pitney Bowes has a dismal earnings surprise history, having missed estimates thrice in the trailing four quarters, resulting in an average negative surprise of 4.9%.

Let's see how things are shaping up for this announcement.

Factors at Play

Pitney Bowes’ concerted efforts to transform its business have started to show results as evident from growth across most business lines. For instance, the new channels that the company has been developing over the last four years namely, the tele and digital channels, proved conducive to growth of in its Mail business.

The transformation initiatives and constant introduction of new products have provided a boost to its performance. This apart, the company’s prolonged effort to enhance and optimize new enterprise business platform is also likely to prove conducive to operating profit and bottom-line growth for the quarter under review.

Moreover, the company’s Global e-commerce business is proving to be one of the strongest profit churners, and is anticipated to boost top-line growth in the third quarter. In less than five years, Global e-commerce has grown from $20 million business to a worth of over $400 million. The company also expects segment’s growth rate to accelerate going forward, in light of growth in overall retail volumes and customer wins.

Further, the company remains optimistic about Commerce Cloud platform, which is expected to enhance digital capabilities and web-based solutions, along with acting as a decisive growth enabler going forward.

However, the fact remains that the company’s major earnings driver — the Small and Medium Business Solutions (“SMB”) business — has witnessed a decline in revenues. The tepid performance was primarily due to prolonged softness in the North American Mailing business as well as International Mailing Business. This is expected to put pressure on the overall top-line performance of the company in the upcoming quarter as well.

Moreover, continued softness in the mailing business is likely to affect Pitney Bowes’ growth momentum for the quarter under review. Lower recurring supplies revenues are expected to adversely affect the mailing business in the upcoming quarter. Additionally, currency fluctuations has remained one of the headwinds over the past few quarters, and is expected to impact earnings and revenues in the upcoming release as well.

This apart, the company has been experiencing a surge in operating expenses due to ERP implementation in the United States and higher marketing expenses in relation to aggressive advertising and marketing strategies. Moreover, it expects incremental marketing expense in the ERP program, related to digital capabilities enhancement, which might reflect poorly on the upcoming quarterly results.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for Pitney Bowes in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP: Earnings ESP for the company is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 45 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Pitney Bowes Inc. Price and EPS Surprise

Pitney Bowes Inc. Price and EPS Surprise | Pitney Bowes Inc. Quote

Zacks Rank: Pitney Bowes has a Zacks Rank #3, which increases the predictive power of the ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Adobe Systems Incorporated (NASDAQ:ADBE) has an Earnings ESP of +0.25% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

A10 Networks, Inc. (NYSE:ATEN) has an Earnings ESP of +50.00% and a Zacks Rank #2.

CGI Group, Inc. (NYSE:GIB) has an Earnings ESP of +0.67 % and a Zacks Rank #2.

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