Pb Valuation
Pitney Bowes Summary
Pitney Bowes (PBI) was founded in 1920 when Arthur Pitney’s American Postage Meter Company merged with Walter Bowes’ Universal Stamping Machine Company. Pitney Bowes is headquartered in Stamford, Conn. and employs more than 30,000 worldwide. The company has been listed on the New York Stock Exchange since 1950 as NYSE: PBI.
Today, PBI offers a broad array of software, hardware and services in more than 100 countries, serving 2 million customers. PBI provides mail processing equipment and integrated mail solutions worldwide. It offers a suite of equipment, supplies, software, services, and solutions for managing and integrating physical and digital communication channels.
Pitney Bowes Valuation
PBI’s current growth is centered on potential economic recovery. PBI has incurred a slowdown in earnings due to the decline of mail, and credit restraints facing business and the expansion of business. Cash flow currently exceeds dividend payments, but has failed to grow over the last ten years. Earnings for PBI peaked in 2006 with a $4.21 cash flow per share, but the dividends have also continued to climb, which has also caused the payout ratio to rise. Therein lays the problem for ownership of PBI for long term investors seeking stability and dividend growth.
The current payout ratio from EPS is 65% based on 2011 actual earnings, and is the same for 2012 estimates. The concern is if this continues to rise, PBI may not be able to continue to meet its obligation to pay dividends, and thus may be forced to use its leverage, or simply cut the dividend all together. This will result in diminished investor confidence, and loss in equity. In addition, an ailing US economy might equate no dividend growth in future years.
The postage meter industry in general has been highly regulated by governments in their respective countries. This creates significant barriers to entry and limits competition worldwide. Currently the only major competitor globally is
Pitney Bowes (PBI) was founded in 1920 when Arthur Pitney’s American Postage Meter Company merged with Walter Bowes’ Universal Stamping Machine Company. Pitney Bowes is headquartered in Stamford, Conn. and employs more than 30,000 worldwide. The company has been listed on the New York Stock Exchange since 1950 as NYSE: PBI.
Today, PBI offers a broad array of software, hardware and services in more than 100 countries, serving 2 million customers. PBI provides mail processing equipment and integrated mail solutions worldwide. It offers a suite of equipment, supplies, software, services, and solutions for managing and integrating physical and digital communication channels.
Pitney Bowes Valuation
PBI’s current growth is centered on potential economic recovery. PBI has incurred a slowdown in earnings due to the decline of mail, and credit restraints facing business and the expansion of business. Cash flow currently exceeds dividend payments, but has failed to grow over the last ten years. Earnings for PBI peaked in 2006 with a $4.21 cash flow per share, but the dividends have also continued to climb, which has also caused the payout ratio to rise. Therein lays the problem for ownership of PBI for long term investors seeking stability and dividend growth.
The current payout ratio from EPS is 65% based on 2011 actual earnings, and is the same for 2012 estimates. The concern is if this continues to rise, PBI may not be able to continue to meet its obligation to pay dividends, and thus may be forced to use its leverage, or simply cut the dividend all together. This will result in diminished investor confidence, and loss in equity. In addition, an ailing US economy might equate no dividend growth in future years.
The postage meter industry in general has been highly regulated by governments in their respective countries. This creates significant barriers to entry and limits competition worldwide. Currently the only major competitor globally is