Pitney Bowes (PBI)

Shipping and mailing solutions provider Pitney Bowes (NYSE:PBI) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 8% year on year to $459.7 million. On the other hand, the company’s outlook for the full year was close to analysts’ estimates with revenue guided to $1.93 billion at the midpoint. Its non-GAAP profit of $0.31 per share was in line with analysts’ consensus estimates.

Company Overview

With a century-long history dating back to 1920 and processing over 15 billion pieces of mail annually, Pitney Bowes (NYSE:PBI) provides shipping, mailing technology, logistics, and financial services to businesses of all sizes.

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Pitney Bowes competes with shipping and logistics giants like FedEx (NYSE:FDX), UPS (NYSE:UPS), and Stamps.com (now Auctane, private), as well as with ecommerce fulfillment providers such as Amazon Logistics (NASDAQ:AMZN) and ShipBob (private).

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.

With $1.93 billion in revenue over the past 12 months, Pitney Bowes is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.

As you can see below, Pitney Bowes struggled to generate demand over the last five years. Its sales dropped by 10.5% annually, a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Pitney Bowes’s recent performance shows its demand remained suppressed as its revenue has declined by 20.1% annually over the last two years.

This quarter, Pitney Bowes missed Wall Street’s estimates and reported a rather uninspiring 8% year-on-year revenue decline, generating $459.7 million of revenue.

Looking ahead, sell-side analysts expect revenue to decline by 1% over the next 12 months. While this projection is better than its two-year trend, it’s tough to feel optimistic about a company facing demand difficulties.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Pitney Bowes was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.6% was weak for a business services business.

On the plus side, Pitney Bowes’s operating margin rose by 9.2 percentage points over the last five years.

This quarter, Pitney Bowes generated an operating margin profit margin of 14.8%, up 1.8 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Pitney Bowes’s EPS grew at an astounding 31.7% compounded annual growth rate over the last five years, higher than its 10.5% annualized revenue declines. This tells us management adapted its cost structure in response to a challenging demand environment.

Diving into Pitney Bowes’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Pitney Bowes’s operating margin expanded by 9.2 percentage points over the last five years. On top of that, its share count shrank by 2.5%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Pitney Bowes, its two-year annual EPS growth of 540% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Pitney Bowes reported adjusted EPS of $0.31, up from $0.21 in the same quarter last year. Despite growing year on year, this print slightly missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Pitney Bowes’s full-year EPS of $1.23 to grow 8.1%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Pitney Bowes has shown weak cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 3.8%, subpar for a business services business.

Taking a step back, an encouraging sign is that Pitney Bowes’s margin expanded by 8.6 percentage points during that time. We have no doubt shareholders would like to continue seeing its cash conversion rise as it gives the company more optionality.

Pitney Bowes’s free cash flow clocked in at $60.38 million in Q3, equivalent to a 13.1% margin. This cash profitability was in line with the comparable period last year and above its five-year average.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Pitney Bowes hasn’t been the highest-quality company lately because of its poor top-line performance, it historically found a few growth initiatives that worked. Its five-year average ROIC was 17%, higher than most business services businesses.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Pitney Bowes’s ROIC has increased significantly over the last few years. This is a good sign, and we hope the company can keep improving.

Pitney Bowes reported $336 million of cash and $2.23 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $392.7 million of EBITDA over the last 12 months, we view Pitney Bowes’s 4.8× net-debt-to-EBITDA ratio as safe. We also see its $49.91 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was encouraging to see Pitney Bowes beat analysts’ full-year EPS guidance expectations this quarter. On the other hand, its revenue missed and its EPS was in line with Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 3.7% to $10.80 immediately after reporting.

Updated: December 3, 2025 at 10:38 PM EST

When considering an investment in Pitney Bowes, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Pitney Bowes isn’t a terrible business, but it doesn’t pass our bar. For starters, its revenue has declined over the last five years. And while its rising cash profitability gives it more optionality, the downside is its operating margins are low compared to other business services companies. On top of that, its low free cash flow margins give it little breathing room.

Pitney Bowes’s P/E ratio based on the next 12 months is 7.1x. While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $14 on the company (compared to the current share price of $9.91).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.