Pitney Bowes' Direct Mail Extension Fails To Impress - Analyst Blog

Pitney Bowes Inc.PBI recently announced that it will be investing to extend its direct mail presorting service to the Southeast U.S. However, the news failed to cheer investors as the company's shares dipped nearly 1.6% following the announcement on Jun 11.

Pitney Bowes is now aiming to increase its market share in the direct mail domain by meeting customer's requirements for reliable and quality mailing services, which are cost effective as well.

The Duncan centre in South Carolina will be company's fifth operating unit for direct mails in the U.S. Prior to this, Pitney Boweshad established an 180,000 square foot modern center in Northeast U.S. by merging its existing centers in Bensalem and Langhorne. The company's other operating centers are based in Corona, CA; Dallas, TX and Milwaukee, WI.

The expanded network will enable the businesses to have broader access to both direct and digital mails for marketing and other commercial purposes. The addition of this center will allow Pitney Bowes to reap the benefits of its expanded coverage across the key regions of U.S. This will reduce the company's postage and operational costs and make its services more affordable for customers as well. 

Speedy and secured delivery of mails is crucial for Pitney Bowes and it uses the United States Postal Service's (USPS) Sectional Center Facilities (SCF) for the same. The company has to maintain a Total Quality Management (TQM) process to comply with the high standards of the USPS partnership. Apart from these, the company's services come with additional features like Full Service Intelligent Mail Barcode Tracking and Self Delivery.

The latest move is part of the company's efforts to strengthen its Enterprise Business Solutions division and tap the immense potential of the direct mail industry. In the last reported quarter (first-quarter 2014), the segment's Presort Services revenues increased 5% year over year to $116.5 million, driven by strong growth in its First Class mail services.

At present, Pitney Bowes holds a Zacks Rank #2 (Buy). Other stocks worth a look in same sector include Canon Inc. CAJ, Cintas Corporation CTAS and Advent Software, Inc. ADVS, both of which have the same Zacks Rank as Pitney Bowes.