Will Pitney Bowes Stock Continue Its Uptrend After Gaining 66% YTD?

Pitney Bowes’ PBI shares have surged 65.7% year to date, outperforming the Zacks Computer and Technology sector and broader S&P 500’s returns of 33.3% and 26.2%, respectively. With such a stellar performance, investors are left wondering — should they double down on PBI or is caution the wiser path?PBI Price Performance Chart Image Source: Zacks Investment Research Pitney Bowes’ Strategic Shift: Shedding the Burden of GECFor years, Pitney Bowes struggled with the underperformance of its Global Ecommerce (GEC) segment. The company had made substantial investments, including the acquisitions of Borderfree in 2015 and Newgistics in 2027, to strengthen the GEC business. The segment initially gained traction during the COVID pandemic. However, post-pandemic, declining package volumes and aggressive discounting by competitors dragged down its profitability.Recognizing GEC as a liability, Pitney Bowes is now divesting this segment, a move that could transform its financial trajectory. The sale to Hilco Global, expected to close in early 2025, is projected to boost annual earnings by $136 million. This strategic exit allows Pitney Bowes to focus on its higher-margin businesses, bolstering profitability and enabling a leaner operational structure.Pitney Bowes’ Financial ResiliencePitney Bowes’ efforts to address its substantial long-term debt and improve liquidity are already bearing fruit. By repatriating $117 million from overseas operations, the company has amassed more than $100 million in excess cash, which will support debt reduction and enhance its financial flexibility.Simultaneously, Pitney Bowes is making significant progress in cost-cutting initiatives. From the beginning of 2024 through the third quarter, the company achieved $90 million in annualized savings from its SendTech and Presort businesses. Management expects total cost savings for the year to range between $150 million and $170 million, underscoring its commitment to driving operational efficiency.Pitney Bowes is demonstrating solid financial recovery as well. The company expects its 2024 earnings before interest and tax (EBIT) to range between $355 million and $360 million, a strong indication of its improving profitability. The Zacks Consensus Estimate for PBI’s 2024 and 2025 earnings indicate year-over-year growth of 850% and 184%, respectively. Image Source: Zacks Investment Research Additionally, the consensus mark for 2024 earnings has moved up three cents to 38 cents per share over the past 60 days, while the estimate for 2025 has moved up by three cents to $1.08 in the past seven days.Strong Customer Base and Partners Aid PBI’s ProspectsPitney Bowes’ extensive customer base, which includes more than 90% of Fortune 500 companies, is a testament to its market dominance. Its partnerships with industry giants such as Amazon AMZN, eBay EBAY, Shopify and Salesforce CRM further solidify its position in the global logistics and technology space.For example, Pitney Bowes provides cross-border e-commerce logistics services to eBay in the U.S. and U.K. markets. Its longstanding partnership with Amazon Web Services (AWS) and membership in the AWS Solution Provider Network highlight its ability to integrate seamlessly with cutting-edge technologies.PBI and Salesforce are connected through the latter’s Shipping API Partner Program. These collaborations not only diversify its revenue streams but also position it for long-term growth.Pitney Bowes Trades at Attractive Valuation MultiplePitney Bowes is currently trading at a forward 12-month price-to-sales (P/S) multiple of 0.67X, significantly below the tech sector’s average of 6.47X. This indicates that the stock is trading at a massive discount, offering a compelling entry point for value-conscious investors. Image Source: Zacks Investment Research Conclusion: Buy PBI Stock NowPitney Bowes is at an inflection point, with its strategic realignment and cost-cutting initiatives paving the way for sustainable growth. The divestiture of the GEC segment, coupled with financial discipline and robust partnerships, positions the company for long-term profitability.Given its strong financial recovery, undervalued stock price and promising growth outlook, Pitney Bowes offers a compelling investment opportunity. Investors looking to capitalize on this transformation should consider adding the stock to their portfolios now. PBI currently sports a Zacks Rank #1 (Strong Buy). 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