Why Pitney Bowes Inc. Stock Surged Today

What happened

Shares of office solutions specialist Pitney Bowes Inc. (NYSE: PBI) were stacking higher today after the company beat estimates in its fourth-quarter earnings report and posted solid 2018 guidance. As of 11:47 a.m. EST, the stock was up 16.1%.

So what

Revenue in the period increased 18% to $1.05 billion, largely due to its earlier acquisition of Newgistics, a digital commerce company. That figure easily beat estimates at $991 million. Adjusted earnings per share fell as expected, declining from $0.53 to $0.40, but that also topped expectations of $0.37.

CEO Marc Lautenbach noted that revenue grew in four out of six business segments for the year, and summed up the performance, saying, "Pitney Bowes is a different company today than it was five years ago. Our strategy is working and the investments we have made for the long-term across all of our businesses are paying off."

Now what

Pitney Bowes, which offers mailing and digital commerce services to businesses, has long held appeal for dividend investors, but the stock has struggled lately, on a four-year slump, with earnings falling as revenue from its mailing segment has consistently declined. Still, the acquisition of Newgisitcs gives the company added growth and a foothold in digital commerce, and the dividend yield of 5.8% should act as a floor on the stock.

For the year ahead, the company sees revenue growth of 9%-13%, better than the analyst consensus and adjusted EPS of $1.40-$1.55, following $1.41 last year. If Pitney Bowes can deliver earnings growth, the stock should move higher over the coming quarters.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.