Pitney Bowes (PBI) takes a huge hit today

Submitted by Frank Lara Jr on Tue, 10/30/2007 - 19:40

Tags:

Financial News

Hard to believe but shares of Pitney Bowes Inc. (Public, NYSE:PBI) took a huge 15% hit today dropping shares $5.80. With shares of Pitney at $39 and just $1 dollar way from a new 52-week low, its got the Masters attention.

Pitney Bowes is the world’s leading provider of mailstream solutions that's been around for the last 87 years. From 2002 to 2006 they have grown revenue at a compound annual growth rate of nearly 8%. In 2006 Pitney generated $5.7 billion in revenue and at the end of 2000, they launched their 'mailstream strategy'. Since then, Pitney Bowes has invested $2.5 billion in 76 acquisitions, of primarily software and services businesses. The acquisitions have also broadened the company geographical presence all over the world and brought in countless customers.

Document Management & Direct Mail Postage Scales

Well the Street's love affair with Pitney ended today after they reported a Q3 profit loss. Their third-quarter profit fell 14% and the downgrades came right in like clockwork. Goldman Sachs lowered their price target to $45 from $52. Lehman Brothers said the drop represented a "rare miss" for the company and lowered their price target to $45.50 from $50.

Fellow Masters, this is a classic over-reaction by Wall Street and if you buy today on the dip, enjoy the 33 cent quarterly dividend while you wait for the stock to recover. The numbers Pitney pulls every quarter are downright stunning, just look at the last two years:

Financials (In millions of USD)

Income Statement	Quarterly (Jun '07)	Annual (2006)	Annual (2005)
Total Revenue	1,543.03	5,730.02	5,366.94
Gross Profit	837.73	3,089.69	2,884.16
Operating Income	239.97	914.49	811.67
Net Income	152.24	105.35	508.61
Balance Sheet
Total Current Assets	3,094.31	2,918.67	2,742.32
Total Assets	9,190.88	8,480.42	10,621.38
Total Current Liabilities	3,457.91	2,746.83	2,910.90
Total Liabilities	8,422.83	7,781.23	9,257.13
Total Equity	768.04	699.19	1,364.25

Pitney Bowes also announced today that it will hold a "special investor call" on Nov. 15 to discuss its plans to deal with the current market conditions. Friends, this is a way to fuel the stock price for the let down today.

Pitney Bowes reported a third-quarter profit of $127.7 million, or 58 cents a share, down from $148.6 million, or 67 cents a share, a year earlier. Excluding tax and impairment charges, earnings per share from continuing operations came in at 63 cents. Sales rose 5% to $1.5 billion.

Analysts polled by Thomson Financial were looking for a profit, on average, of 74 cents a share on sales of $1.56 billion. The company had originally called for earnings of 70 cents to 74 cents a share.

Minor setback for Pitney and a great time for investors to buy on weakness.

Article by Frank Lara Jr.

Contributor at TheStockMasters.com

Disclaimer: The Author does not hold any positions or shares in the securities mentioned in this publication.

5 Second Advertisement by theStockMasters - Just read it, we're cheap.

Our Original newsletter that has enlightened our subscribers for over a year. It contains What to Buy, What to Sell, and Market Commentary. We have a 17.5% return since October 2006 and the average wait for a return is only 3.61 months and we have the track record to prove it (click here to view Master Picks track record). We've had great feedback, and in turn have already created a unique following of thousands of Stockmasters. Our asking price is only $45 for a 12 month subscription.