Why Diebold Incorporated Shares Surged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Diebold (NYSE: DBD  ) , a self-service solutions and security solutions provider, surged higher by as much as 10% after the company reported its fourth-quarter earnings results before the opening bell.

So what: Diebold, one of the world's largest makers of automated teller machines, reported a decline in revenue of 3% to $811.4 million as adjusted EPS expanded to $0.57 from $0.43 in the year-ago period. These results were mixed based on what the Street had been looking for with revenue $10 million ahead of estimates and EPS $0.02 shy of estimates. Security product revenue, especially election systems sold to Latin America, weighed on Diebold's top-line. Looking forward, though, Diebold reaffirmed its previous guidance of $1.65-$1.85 in adjusted EPS with revenue up in the low single digits.

Now what: Given that Diebold witnessed a close to 5% decline in full-year revenue, the simple fact that its top line will grow in the low single digits is enough to encourage investors. Let's also recall that no publicly listed company has a longer streak of raising its annual dividend than Diebold, so it's a highly respected stock selection among income investors. The fact that it reaffirmed its guidance is a strong indication that its dividend could rise again this year. One concern I do have, however, is that Diebold has missed the Street's estimates in four of the past five quarters. I'm certainly willing to give the company a bit of a break given that its security products can be very cyclical, but long-term investors should certainly be aware of that fact before diving into Diebold.

Diebold may be rallying strongly today, but it'll be hard-pressed to match the potential gains from this top stock in 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2838823, ~/Articles/ArticleHandler.aspx, 9/1/2014 8:02:58 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement