Watch Out: Barbarians At The Gate For Pitney Bowes (PBI)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Pitney Bowes ( PBI) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Pitney Bowes as such a stock due to the following factors:

  • PBI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $67.5 million.
  • PBI has traded 3.2 million shares today.
  • PBI traded in a range 244.6% of the normal price range with a price range of $0.94.
  • PBI traded above its daily resistance level (quality: 531 days, meaning that the stock is crossing a resistance level set by the last 531 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on PBI:

Pitney Bowes Inc. provides software, hardware, and services to enable physical and digital communications in the United States and internationally. The stock currently has a dividend yield of 4.1%. PBI has a PE ratio of 13.3. Currently there is 1 analyst that rates Pitney Bowes a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Pitney Bowes has been 4.9 million shares per day over the past 30 days. Pitney Bowes has a market cap of $3.7 billion and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 1.53 and a short float of 30.2% with 13.84 days to cover. Shares are up 70.2% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Pitney Bowes as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and generally higher debt management risk.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, PBI's share price has jumped by 40.32%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Commercial Services & Supplies industry and the overall market, PITNEY BOWES INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for PITNEY BOWES INC is rather high; currently it is at 57.22%. Regardless of PBI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.79% trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Services & Supplies industry. The net income has significantly decreased by 109.3% when compared to the same quarter one year ago, falling from $99.62 million to -$9.23 million.
  • Net operating cash flow has decreased to $146.88 million or 46.42% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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