Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Diebold Nixdorf Stock Is Plunging Today

By Matthew Frankel, CFP® - May 2, 2018 at 12:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here's a hint: Diebold's income-seeking investors are not happy.

What happened

Diebold Nixdorf (DBD 1.76%), better known simply as Diebold, reported first-quarter earnings on Wednesday morning, and Wall Street does not seem happy with the company's results. As of 12:12 p.m. EDT, shares are down 15.9%.

Revenue declined 3.5% year over year, and the company reported a loss of $0.94 per share, significantly worse than a year ago. CFO Chris Chapman said that the company is still facing challenges, with "banking hardware revenue and the associated profitability remaining under pressure."

Most significantly, Diebold decided to suspend its dividend, which is currently paid at a rate of $0.40 per share.

Man staring at stock price chart with hands on his head.

Image source: Getty Images.

So what

The suspension of the dividend is a major blow to Diebold investors, as the company has been one of the most predictable dividend growth stocks for decades. In fact, until recently, Diebold maintained a 60-year-plus streak of not only maintaining the dividend, but increasing it year after year, the longest streak (at the time) of any public U.S. company.

Now what

To be fair, much of the company's loss (and projected future 2018 losses) was due to a recent acquisition, as well as one-time restructuring expenses and other one-time expenses. On an adjusted basis, the company expects 2018 EPS in the range of $1.00-$1.30 per share, which means that the stock now trades at a rock-bottom valuation of just 11.1 times the midpoint of this range.

Diebold has a long way to go before it regains shareholder confidence, and even though the suspension of the dividend is likely a wise move by management, it's a a serious hit to income investors. If the company is successful in turning things around, the new lower stock price could look cheap, but there's a lot of uncertainty ahead for the time being.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Diebold Nixdorf, Incorporated Stock Quote
Diebold Nixdorf, Incorporated
DBD
$2.31 (1.76%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
311%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.