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Here's Why Diebold Nixdorf Stock Is Plunging Today

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

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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.

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Stocks Mentioned

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

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