Shares of small-cap postal delivery solutions provider Pitney Bowes (NYSE: PBI) got rocked in Thursday afternoon trading — down 15.1% as of 1:35 p.m. ET — after reporting misses on both the top and bottom lines this morning.
Heading into the quarter, analysts had forecast Pitney Bowes would earn $0.04 per share on $898 million in sales. As it turned out, profits were just half that — $0.02 per share — and sales “missed” by 3%.
Wall Street was hoping Pitney Bowes could at least eke out a “flat” quarter relative to last year, but Pitney Bowes’ sales slid 3% instead, to $871 million. Earnings — both according to generally accepted accounting principles (GAAP) and pro forma — simply collapsed, down 82% year over year to the aforementioned $0.02. Free cash flow evaporated, with $6 million in real cash profit coming in 93% below second-quarter 2021 levels.
Among Pitney Bowes’ three major business divisions, the second largest and most profitable — SendTech Solutions — saw sales slide 2% and profits decline 11%. Pitney Bowes’ biggest division by revenue, Global Ecommerce, suffered a 6% decline in revenue as cross-border shipments dried up and higher margins on domestic shipments weren’t enough to offset a decline in volume, resulting in losses more than doubling.
The company’s small Presort Services division was the only one to grow its revenues last quarter — and there, profits still declined by 20%.
Factoring these disappointing results into its projections, alongside a revenue reduction from its sale of its Borderfree business and general “uncertain macroeconomic conditions,” Pitney Bowes revised its guidance for the rest of this year. Management now warns that full-year revenue will be roughly flat, somewhere between a “low-single digit percentage decline” and a “low single digit percentage increase.”
Operating profits will suffer a mid-to-high single-digit decline, probably resulting in a loss for the year. If it happens, it will be Pitney Bowes’ third straight annual loss. Although management tried to soften the blow by promising “solid” but “lower … than prior year” free cash flow, investors still are understandably less than thrilled with the news.
Even at a not-expensive-seeming 14 times earnings, Pitney Bowes stock simply doesn’t have a lot going for it at the moment. Until that changes, I wouldn’t expect much of a bounceback from today’s sell-off anytime soon.