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No. of Recommendations: 1
A. Also, I do note that management cut the dividend to increase share buybacks...sensible as a
response to the drop in price. (But do to the drop in price it now yields over 6%)

B. Yahoo Finance reports the dividend payout ratio is 78%. That's alarmingly high. Dividend is going to get cut; just a question of when.

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A. Anyone else have thoughts here? Unless they swing to losses or have funding risk it seems hard to
fail buying at an estimated 2020 PE of 3.

B. One other thing that jumped out at me in the five minutes I spent on this is that 20% of the float is short. That's a lot of short interest. You might make some money here on short squeezes if you were so inclined. It's risky and I probably won't do that myself.

Otherwise this seems like a business that's destined to go to zero eventually, just a question of when that happens.



There is much to agree with here, but some of the numbers don't make sense. If they really are trading at 3 times earnings (Yahoo says 3.76, but let's not quibble), then there is about a 30% earnings yield, taking the average of those two numbers. If it really has a 6-7% dividend rate (Yahoo says it is 5.32%), then that is nowhere near a 78% payout rate, and would be in no danger of being cut. Yes, earnings will eventually go to zero, everyone has known that about Pitney Bowes forever, but if they can do that slowly, as in, losing say 10% of sales (and costs) over each of the next 10 years (revenues have actually held up remarkably well over the last few years, with 2018 revenues at $3.5b and 2015 revenues at $3.6b), then the accumulated earnings might more than cover the cost of buying shares today, as long as the shareholder gets them back somehow.

So it comes down to, would they have any assets if they liquidated in a few years? They have a market cap of $584m at close today, with $86m in equity, but they have only -$1.9b (with a b) in tangible assets; almost all of their assets consist of goodwill. Does anyone think that Pitney Bowes goodwill is worth $1.8b? They also have about $3b in long-term debt, with $840m in cash and cash equivalents. OK, I guess I come to the same conclusion as the others.

The thing I would would want to know more about is, are there any parts of their business that are NOT terminal? Things they have acquired or developed recently? Do they have any asset (patents for instance) that might be worth a few hundred million? Only then would the o, maybe the price is low enough to have a look after all.

dtb
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