Is PBI a good stock to buy?We came across a bullish thesis on Pitney Bowes Inc. on Hidden Rock Capital's Newsletter's Substack by Hidden Rock Capital. In this article, we will summarize the bulls' thesis on PBI. Pitney Bowes Inc.'s share was trading at $16.48 as of October 7th 2026. PBI's trailing and forward P/E were 14.09 and 7.25 respectively according to Yahoo Finance.
This isn't the first time we see a mailing and shipping company pitched as a great investment. PBI shares gained 48.65% over the last 12 months. Comparable stocks like Brady Corporation (BRC) and ACCO Brands Corporation (ACCO) gained 15.33% and 13.04%, respectively, during the same period. Why are these stocks rising so much and is it really a good time to buy them?
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In June, we published an article about the 13 Best Dividend Stocks to Buy Under $25 and PBI ranked #7 in that article. PBI lost 3.38% since then. So, hedge funds were bullish on PBI but the stock was a disappointment. This article explains why hedge funds were bullish on PBI. Before getting into our analysis, let's take a look at the business and why some investors like the stock so much.
Pitney Bowes Inc. (NYSE:PBI) is a shipping, mailing, logistics, and financial services company, and its turnaround story under CEO Kurt Wolf is central to understanding the stock. Pitney Bowes Inc. has sold off its money-losing Global Ecommerce business, cut costs, improved cash flow, paid down debt, and bought back a large amount of stock. Revenue in the first quarter of 2026 fell just 3% from a year earlier, while profit, earnings per share, and cash flow all improved by much larger amounts. Management expects to generate $345 million to $380 million in free cash flow in 2026, and the stock is up roughly 60% this year. This suggests investors believe Pitney Bowes Inc. can move past the easier early stage of its turnaround and create more value from here.
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The bullish case is that Pitney Bowes Inc. can keep improving its profits and cash flow while returning a lot of that cash to shareholders. The company has paid off $347 million in debt that was due in 2027 and is using much of its free cash flow to buy back shares, with an authorization to repurchase stock worth more than 20% of all shares outstanding. Over about 14 months, management has slowed the pace of revenue decline, boosted profitability and cash generation, cleared near-term debt risks, and bought back shares aggressively, giving bulls real evidence that the strategy is working.
The next challenge for management is the harder second stage of the turnaround: finding further cost savings, growing the core software and logistics businesses on a lasting basis, and possibly selling off its financial services division. If these efforts succeed and share buybacks continue at attractive prices, bulls believe there is another significant round of value creation ahead, beyond what has already been achieved through cost-cutting. Pitney Bowes Inc. has also started a second strategic review that could include selling part or all of the company. A sale could speed up the process of unlocking value that might otherwise take years, though finding the right buyer isn't something management can fully control.
The bullish valuation case points to a fair value of $26 to $34 per share, which implies significant further upside even after this year's roughly 60% rally. That range comes from applying a 10 to 12 times multiple to management's free cash flow guidance, and the midpoint works out to about 70% to 80% higher than where the stock trades today. The key thing to watch is whether Pitney Bowes Inc. can keep growing its cash flow, since any weakness there would make it harder to justify this kind of valuation.
The main risk to the story is that this harder second phase may not go as smoothly. Unlike the earlier phase, which was largely within management's control, such as exiting a bad business, cutting costs, refinancing debt, and buying back shares, growing the core business and finding a buyer or partner depends on competitive conditions outside the company's control. From a trading perspective, the stock also looks stretched after its rally, and it is now hovering near an important support level around $16. A break below that level could open the door to a larger pullback toward the next support zone near $12.
Another risk for the stock is declining physical mail volumes. Electronic bills and statements are reducing demand for traditional mailing services. Higher postage costs give businesses another reason to switch to digital alternatives. Pitney Bowes' Presort volumes fell 7% in 2025 due to customer losses and broader market decline. Its equipment and sorting businesses depend on physical mail demand. Lower volumes could weaken equipment sales and raise processing costs per piece. In our opinion, this shrinking market could keep price multiples low if cost savings and buybacks cannot offset the decline.
Hedge fund positioning shows a mixed signal. As per our database, 33 hedge funds held Pitney Bowes Inc. at the end of the second quarter, down slightly from 34 funds in the prior quarter. That small pullback suggests institutional investors are still broadly comfortable with the turnaround story, even as some funds took profits after the stock's sharp rise. In comparison, Xerox Holdings Corporation (NASDAQ:XRX) was held by 31 hedge funds, up from 27, Brady Corporation (NYSE:BRC) was held by 28 hedge funds, up sharply from 18, and ACCO Brands Corporation (NYSE:ACCO) was held by 17 hedge funds, up from 14. The divergence suggests institutional investors showed the strongest increase in conviction toward Brady Corporation during the second quarter, while Xerox Holdings Corporation and ACCO Brands Corporation also saw increased hedge fund participation, compared with a modest decline in Pitney Bowes Inc. despite its improving fundamentals and long-term turnaround potential.
Short interest data paints a more cautious picture for Pitney Bowes Inc., with 16.70% of its shares sold short. That is far higher than Brady Corporation at 2.38% and ACCO Brands Corporation at 7.63%, but considerably lower than Xerox Holdings Corporation, where more than a third of shares, 34.92%, are sold short. In other words, a meaningful share of investors are betting against Pitney Bowes Inc. right now as it enters the tougher next stage of its turnaround.
Valuation Analysis
PBI's EV/EBITDA is 17.29. Xerox Holdings Corporation, Brady Corporation, and ACCO Brands Corporation trade at EV/EBITDA multiples of 12.35, 12.19, and 6.72, respectively. This puts PBI at approximately a 40% premium to Xerox, a 42% premium to Brady, and more than twice ACCO's multiple. We believe 17.29 times EBITDA is a demanding valuation for a stock like PBI. This means investors who buy PBI at its current price are pretty much betting that further cost savings and business improvements will keep profits growing despite declining mail volumes. Pitney Bowes Inc.'s adjusted EBITDA was $499.7 million in 2024 and $572.9 million in 2025. This puts its adjusted EBITDA growth rate at approximately 15% over this recent one-year period. We don't think that growth alone justifies paying such a large premium to all three peers. Its turnaround is improving profitability, but this valuation already prices in further success. We don't think investors should count on PBI's profit growth continuing strongly enough to justify paying a substantial premium to all three peers. Its turnaround is improving the business, but at 17.29 times EBITDA, we believe the stock is expensive and could fall if cost savings or profit growth disappoint.
Previously, we covered a bullish thesis on Pitney Bowes Inc. (PBI) by Unemployed Value Degen in March 2025, which highlighted activist-driven reforms, improving free cash flow, EBITDA growth, and share repurchases. PBI's stock price has appreciated by approximately 73.10% since our coverage.We believe PBI may not be a good long-term investment at its current price, as its recent profit growth does not justify the substantial valuation premium to peers.
Pitney Bowes Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds .While PBI may see a temporary rally if further cost savings, share buybacks, or a potential sale of part or all of the company boost investor confidence, we believe some AI stocks offer stronger long-term potential, with a high probability of delivering superior returns on a much shorter timeline. If you are looking for an AI stock that is more promising than PBI and that has 10,000% upside potential, check out our report about this cheapest AI stock .
Disclosure: None.
