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Pitney Bowes Inc. (PBI) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Pitney Bowes Inc. (PBI)

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Intrinsic Value (DCF)

Current$10.74
→
Intrinsic$21.71
+102%
$12.02$21.71$40.09
Market implies 13% growth for 5 years
DCF analysis suggests PBI could have 102% upside at 25% growth — verify assumptions match your view.
At $11, the market prices in 13% annual cash flow growth — a moderate expectation aligned with historical trends (25%).
Range: Bear $12 → Bull $40. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →21%23%25%27%
8%$29$32$35$38
10%$17$20$22$24
12%$11$13$14$16
14%$7$9$10$11

Bull Case

  • Bull case ($40) offers 273% upside at 30% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (13%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($12) with 20% growth, 12% discount rate
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$195.96M
Year 2$244.95M
Year 3$306.19M
Year 4$382.73M
Year 5$478.41M
Terminal$7.04B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$156.77MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is PBI stock undervalued or overvalued?
🟢 UNDERVALUED

PBI trades at $10.74 vs. our DCF-derived intrinsic value of $16.50, implying +63% upside. At a 10.0% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of PBI's future cash flows. The bear case ($7.85) still suggests upside, providing margin of safety.

What is PBI's intrinsic value?

Using a 5-year DCF model: Base FCF of $157M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.58B net debt and dividing by 0.18B shares: Bear $7.85 | Base $16.50 | Bull $29.24. Current price $10.74 implies +63% to base case.

How is PBI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($4.59B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.