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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
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