How to buy Poste Italiane stocks in 2022
Poste Italiane is an Italian company providing logistics and postal services as well as offering financial and insurance services. The company operates over 12,500 postal offices in Italy and is one of the oldest companies in Europe.
This article is a guide on buying Poste Italian stocks, providing an in-depth view of the company's business and the recent financial performance. In addition, we look at the fundamentals behind Poste Italiane's business and interpret the financial strengths and weaknesses, so you’ll have all the information needed to trade Poste Italiane stock with confidence.
How to Buy PITAF Stocks in 5 Easy Steps
1Visit eToro through the link below and sign up by entering your details in the required fields.
2Provide all your personal data and fill out a basic questionnaire for informational purposes.
3Click 'Deposit', choose your favourite payment method and follow the instructions to fund your account.
4Search for your favourite stock and see the main stats. Once you're ready to invest, click on 'Trade'.
5Enter the amount you want to invest and configure your trade to buy the stock.
Everything You Need To Know About Poste Italiane
Let's begin with a look at the Poste Italiane's history and its business strategy.
Poste Italiane History
Headquartered in Rome, Poste Italiane is more than just the Italian postal services provider. The company employs over 120,000 people and operates 12,765 offices in the country. It ran close to 600 million postal office transactions in 2020 alone and was founded in 1862.
The company is the result of the so-called "postal reform" in Italy and nowadays covers all the Italian territory. It is one of the largest players in Italy's life and the health insurance industry, also providing financial services.
What Is Poste Italiane's Strategy?
Starting as a simple postal services provider, Poste Italiane expanded into areas such as card payments, mobile telecommunication services, and other digital services for the public sector. It even offers investment services through its financial services arm.
How Does Poste Italiane Make Money?
Poste Italiane's business is split into four segments – postal services (i.e., mail, parcels, and distribution), digital and insurance services, and financial services.
The company's name indicates the main business segment – postal services. In this area, Poste Italiane offers services such as express delivery, logistics, or philately. The financial services segment collects savings deposits and promotes loans issued by banks, among others.
Poste Italiane's services are based on its physical network of post offices flanked by a commercial network dealing with business customers. It also participates in third-party networks, offering services via more than 37,000 retail outlets and other commercial partnership agreements.
How Has Poste Italiane Performed in Recent Years?
Poste Italiane stock price went up more than 85% in the last five years. The company's share price reacted to the COVID-19 pandemic and halved in price during the stock market selloff that affected the international equity markets. However, it bounced from the lows and recovered all the losses and some. The year 2021, in particular, saw the Poste Italiane stock price advancing sharply, reaching a new high compared to the pre-COVID period.
Where Can You Buy Poste Italiane Stock?
The typical way of buying shares in a company is by using the services of a stockbroker. Stockbrokers execute the client's orders and offer access to the stock market in exchange for some fees or commissions.
Another possibility is to trade CFDs or contracts-for-difference. These are financial products that track the movements of a stock, and investors use them especially when planning to short-sell a stock. Some brokers offer both CFDs and regular shares, so make sure you know exactly what lies in the broker's offering.
Poste Italiane Fundamental Analysis
Fundamental analysis is essential to consider before buying shares of a company. It offers a glimpse into the past financial performance and provides an educated guess about what might happen in the future regarding the business performance. Because the financial results impact the stock price, interpreting them using fundamental analysis is a critical step in the decision-making process. In this section of the article, we look at Poste Italiane's revenue, earnings-per-share (EPS), dividend yield, price/earnings (PE) ratio, and cash flow.
Poste Italiane's Revenue
Revenue is the top line on the income statement – one of the key financial statements to interpret, offering a clue about a company's profitability. It all starts with revenues, or how much the company brings in from sales over a certain period. In this case, the annual revenue estimate for 2021 is €11.33 billion, and revenues are projected to increase in the years ahead, reaching €12.64 billion by 2024.
Poste Italiane's Earnings-per-Share
Earnings-per-share is one of the most important metrics to measure a company's profitability. The EPS ratio is also called the "bottom line" because it is the last line on the income statement.
As the name suggests, the metric shows how much the company earned per one share. Naturally, the higher the number, the better the stock price as it suggests improved profitability.
The estimates are that Poste Italiane will earn €1.14/share in 2021. By 2022, the EPS is expected to decline to €1.10. However, in the years to follow, the profitability improves, as the EPS is expected to reach €1.44 in 2024.
Poste Italiane's P/E Ratio
One of the key ratios to value a company is the price/earnings ratio or the P/E ratio. The ratio is calculated by dividing the price of one share by the earnings per share. It shows how many euros investors are willing to pay for every euro the company earns in profit annually. Poste Italiane trades at a P/E ratio of 10.04 in 2021, expected to decline gradually over the next three years and settle at 7.96 in 2024.
Poste Italiane's Dividend Yield
Poste Italiane is a dividend-paying company with a dividend yield of 4.35% trailing 12 months and a dividend payout ratio of 44.38%. The dividend yield is also called the dividend/price ratio and is calculated by dividing the dividend by the current stock market price. Some investors prefer dividend-paying companies because of the possibility to reinvest the income and, thus, to compound earnings.
Poste Italiane's Cash Flow
After the company covers all its costs of staying in business, the remaining cash is known as free cash flow. A strong cash flow position suggests that the company has the resources to expand the business in other areas, enter new markets, or launch new products and services. Conversely, a poor cash flow position suggests that the debt level might increase in the future due to the company's need for additional cash. Poste Italiane free cash flow is estimated at €357 million in 2021, €448 million in 2022, and €504 million in 2023.
Why Buy Poste Italiane Stocks?
One of the things to know about Poste Italiane is that management tried to diversify away from the postal services to other activities such as the payments and mobile division. Nowadays, financial services, payments and mobile services, and insurance businesses are responsible for a rising share of revenues. Moreover, investments in the digital infrastructure led to improved customer experience and showed continuous innovation.
Here are a few reasons to buy Poste Italiane stocks:
- Improved revenue mix;
- Strong increase in the payments and mobile segment;
- Constant focus on innovation and improved customer experience.
Expert Tip on Buying Poste Italiane Stock“ If you are into owning a dividend-paying stock with a high dividend yield, then this is one stock for you to consider. The longevity of the business stands as proof that Poste Italiane can weather the ups and downs of the economy and is able to make a profit. ”- Mircea Vasiu
Things to Consider Before Buying Poste Italiane Stock
There are many things to consider before buying Poste Italiane stock, and the most important ones are listed below.
1. Understand the Company
The starting point is to make sure you understand the company. You may start by looking into the business, how it makes money, and what the current market valuation is. Fundamental and technical analysis help form an educated guess about where the price might go next, and you should focus on what you believe to be the intrinsic value of the stock.
2. Understand the Basics of Investing
Investing is not as simple as just buying and waiting, as the markets' volatility often tests the investors’ patience. Therefore, it is imperative to have a good base and be familiar with risk management, money management, how the broker executes the trades, how to diversify an investment portfolio, and others. Also, diversification helps spread the risk. It is a key money management concept, and investors want to have a diversified portfolio with uncorrelated investments.
3. Carefully Choose Your Broker
The brokerage house is your partner in the investing/trading journey. The aim is to be successful, and a good broker should strive to provide the best trading conditions for its clients.
Things like reputation, customer service, costs and charges, ease of deposit, and withdrawal do matter for the trader. But, above all, commissions and orders' execution play an essential role, too. Therefore, you will be responsible for doing due diligence and carefully choosing the best broker for your needs.
4. Decide How Much You Want to Invest
Investing bears risk, so it is never wise to invest money you cannot afford to lose. How much to invest depends on the risk appetite and the risk profile of every individual. Borrowing money to invest in stocks is never a good decision, unlike you know how to use leverage or a margin account, and neither is "betting the farm" on any one stock. Instead, investors are better off risking a percentage of the capital on any given trade (1% or 2% are the norms).
5. Decide on a Goal for Your Investment
People invest for various reasons, such as building a pension fund for retirement, speculating, or simply not wanting to feel left outside of a major bullish cycle. Whatever the reason, defining a goal is an integral part of money management. Also, make sure to lay down what has to happen to give up on your investment. More precisely, what is the risk tolerance level, or the invalidation level, that should make you sell one stock or the other? For this, both technical and fundamental analyses work, depending on your time horizon.
The Bottom Line on Buying Poste Italiane Stocks
Poste Italiane is a dividend-paying company that diversified its operations in order to reduce the dependency on postal services. As a result, the company's cash flow position is forecast to improve in the following years, and the stock price recovered all of the decline caused by the COVID-19 pandemic.
For the one that feels ready and confident to invest in Poste Italiane stocks, the first step is to pick a broker that offers Poste Italiane shares. Next, find the stock and shortlist it before placing an order. Trading may take place at the current market price or at a predefined level. In the latter case, the broker offers pending orders and will execute the order only if and when the price reaches the specified price.
For the one that is not confident enough to start trading stocks, perhaps reading other educational materials on our website might help. Investing is full of new terms for the inexperienced trader, and learning is a constant process.
Frequently Asked Questions
Poste Italiane is a profitable company. The estimates for 2021 are that it will post a net profit of €1.517 billion. By the end of 2024, the net profit is forecast to reach €1.75 billion.
No. Nothing is guaranteed in the investing world, but Poste Italiane is likely to continue to pay dividends to its shareholders, based on its history. The company's dividend yield is lower compared to 2020 but higher compared to 2019.
Almost 65% of the shares are owned by the state, while institutional investors own 8.47% of Poste Italiane shares. The market capitalisation of the shares belonging to institutional investors is about €1.5 billion. The rest of 26.84% shares are owned by the general public, investors searching to diversify their portfolios by adding a dividend-paying company with a high dividend yield.
Poste Italiane is a company that pays a semiannual dividend – at the end of June and the end of December of each year. In sharp contrast to American companies, European companies do not pay a dividend quarterly – most of them pay a dividend once a year.
Yes. Depending on the asset to trade, short-selling differs. If you decide to short-sell the Poste Italiane stocks, the first thing to do is to borrow the shares from the broker and instruct the broker to sell them in the market. The downside of short-selling shares is that the loss is unbounded unless the broker offers negative balance protection or you use a stop-loss order.
On the other hand, short-selling is easier and cheaper when using a CFD than actual shares. Remember that a CFD tracks the price movements of the underlying asset – in this case, it tracks the Poste Italiane stock. If the price of one share declines, the CFD will reflect the movement, and the trader may book a profit. Ideally, the brokerage house should offer both options, and you should buy the shares if you believe that the stock price will rise in the future. If you think the price is about to drop, you should short-sell the CFD.
The brokerage house usually offers all the tools needed to manage risk. To start with, think of the invalidation level of any given market setup. Both technical (for short-term trades) and fundamental factors (for long-term investing) may weigh on this decision. For example, the company may decide to stop paying dividends in the future. Or, the technical analysis picture shows overbought conditions. For whatever reason, make sure you have a contingency plan for dealing with any event. Next, look for a broker that offers negative balance protection. This way, the potential loss is limited to the capital you have in your account. Finally, make sure you use pending orders to plan and execute a trade.