Company Description: Pitney Bowes Inc. is the world's largest maker of mailing systems, also provides production and document management equipment and facilities management services.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
- Avg. High Yield Price
- 20-Year DCF Price
- Avg. P/E Price
- Graham Number
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description:
- Rolling 4-yr Div. > 15%
- Dividend Growth Rate
- Years of Div. Growth
- 1-Yr. > 5-Yr Growth
- Payout 15% of avg.
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:
- NPV MMA Diff.
- Years to >MMA
Other: PBI is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend Achievers™ Index. PBI's revenue growth has been unimpressive and they will need to integrate recent acquisitions. Historically, PBI has maintaind a steady cash flow from recurring revenue streams, and it has used this cash flow to execute a consistent dividend policy and share buyback program.
Conclusion: PBI lost one Star in the Fair Value section, earned one Star in the Dividend Analytical Data section and lost one Star in the Dividend Income vs. MMA section for a net total of negative one Star. Since my scale bottoms out at zero, this quantitatively ranks PBI as a 0 Star-Avoid stock.
Using my D4L-PreScreen.xls model, I determined the share price would have to drop to $28.11 before PBI's NPV MMA Diff. increases to the $3,000 NPV MMA Diff. that I like to see. At that price PBI would yield 4.98%.
Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the $3,000 NPV MMA Differential I'm looking for, the calculated rate is 6.3%. This dividend growth rate is substantially abovethe 2.1% average between 2001-and 2007. PBI has a long way to go before it earns a spot in my income portfolio.
Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.
Full Disclosure: At the time of this writing, I had no position in PBI (0.0% of my Income Portfolio) .
What are your thoughts on PBI?