Please ensure Javascript is enabled for purposes of website accessibility

Why Diebold Nixdorf Stock Just Popped 16.5%

By Rich Smith - Updated Apr 15, 2019 at 10:56PM

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

Davidson sees sales growth and cost reductions in Diebold's future.

What happened

Shares of ATM manufacturer Diebold Nixdorf (DBD -1.66%) are skyrocketing -- up 16.5% as of 11 a.m. EST today -- in response to a big thumbs-up from Wall Street analyst D. A. Davidson.

This morning, the banker announced it is upgrading Diebold stock from neutral to buy and assigning a $5 price target to this $3 (and change) stock.

Four women using four ATMs

D. A. Davidson sees more ATMs in Diebold's future. Image source: Getty Images.

So what

Davidson cites "a more favorable ATM industry overlay" as justifying its upgrade, predicting "a modest recovery in unit shipments" of ATMs in 2019 "following three sequential years of declines," as explained today in a note on

Such an increase in shipments would logically result in an increase in revenues. At the same time, Davidson argues that "DBD's DN Now cost reduction program is gaining traction," which, if true, would mean lower cost -- and higher profit margins -- on those increased revenues.

Now what

Now, it's not entirely clear that Davidson is right about this. Fact is, year-to-date sales at Diebold are down about 1.4% in comparison to this time last year, while cost of goods sold is up about 0.6% and operating costs have risen 4.3%.

Still, Davidson believes that as Diebold's cost reduction efforts gain strength, the company could end up cutting operating costs by as much as $250 million per annum by 2021. If Davidson's right about that, it would equate to a reduction of more than 24% in operating costs -- and easily be enough to erase the $23 million operating loss Diebold has racked up over the past year and make the company profitable on an operating basis at least.

What's more, Davidson says we'll probably see "bottom-line improvements" as early as 2019. Given that Diebold is currently losing money at the rate of nearly $530 million a year, that would be a nice change indeed.

Check out the latest Diebold earnings call transcript.

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
$2.37 (-1.66%) $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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

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.