Pitney Bowes (PBI)

I just established a small starter position in Pitney Bowes (PBI) at 24.91, a stock that I have never owned prior to today.   The company reports earnings after the close.  Normally, I would wait to see the earnings report before buying but decided to go ahead with the starter position this afternoon due to the severe decline already suffered by this stock.  It is currently selling at a level last seen in 1996, except for a brief dip down to 21 a few days ago.   At my price, it has a dividend yield or slightly over 5.6%.  It is a defensive position.  The stock was around 35 in mid-September.  This company has a dominant position in the postage meter market in the U.S. with something close to a 80% share, with about a 65% share internationally.  This position would be hard for another company to penetrate according to the Morningstar report.  While demand may fall during the current recession, I would anticipate that it is more recession resistant than most businesses.  PBI has been on an acquisition spree for the past 3 years, acquiring businesses for about 1.1 billion, including the acquisition of MapInfo for 464 million in 2007 , a provider of location software. Morningstar questions the wisdom of these acquisitions, as being dilutive, while Value Line has a more positive take.   The company has reduced its workforce already by about 6% over the past 3 quarters.  Morningstar has PBI rated 5 stars and  S & P gives it a 4 star rating.  The earnings estimate for 2009 is at 3.11 or about a forward P/E of 8 at my purchase price. PBI: Analyst Estimates for PITNEY BOWES INC - Yahoo! Finance Price to sales is less than 1.  As of 6/08, it had 429 million in cash on the balance sheet. PBI: Balance Sheet for PITNEY BOWES INC - Yahoo! Finance,    Long term debt was over 4 billion with EBITDA coverage of around 3.7 to 1 on the debt. .  A standard historical P/E for this company would be in the 15 to 20 range.   One of the knocks would be slow growth in its traditional postal meter business, and that may explain why it is venturing into new areas, primarily software related, which also entails more risks. 

Generally I have a plan about the circumstances and the price of additions to a starter position when I first establish it.  I will wait to develop a plan for PBI until after I read the earnings report tonight. 

I decided to wait on making a re-entry back into Sysco, at least for a few days.

    I am not a financial advisor but an individual investor trying to navigate my way through a mind field. In these posts, I am acting as an unpaid financial journalist and an occasional ornery political commentator.   I am also aggregating financial news stories that I view as important and providing any reader of these posts, assuming there are more than a couple, with links to those articles, sort of a filtered, somewhat intelligent, free search engine.  Any discussion made by me of particular securities  is not a recommendation to buy or to sell.  Trade at your own risk.  Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons.  The sale may before or after the post.  Before buying or selling any stock, even one recommended by a trusted financial advisor,  please research it and make up your own mind which is what I always try to do.  Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news.  In this post, and all others by me, I am merely describing my reasons for purchasing  or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale.  The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile.  Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments.