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Why Diebold Nixdorf Stock Just Dropped 18%

By Rich Smith – Apr 30, 2019 at 12:51PM

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Investors are beating a hasty withdrawal from Diebold stock.

What happened

What went up is coming back down. Shares of ATM manufacturer Diebold Nixdorf (DBD 3.45%), which soared earlier this year on the back of a positive note from Wall Street stock shop D.A. Davidson, are plummeting today as an analyst's endorsement proved premature.

This morning, Diebold reported its fiscal first-quarter 2019 earnings -- or, rather, its Q1 2019 losses -- and the news was even worse than you think. Instead of the $0.35-per-share loss that Wall Street had forecast for the stock, Diebold reported that it lost $1.74 per share last quarter ($0.63 on a pro forma basis). Sales for the quarter -- $1 billion and change -- likewise fell short of estimates.

A line of customers withdrawing cash from a bank of ATMs

Image source: Getty Images.

So what

Diebold's $1 billion in Q1 revenue declined 3% year over year, while its net losses more than doubled to $132 million on a GAAP basis.

On the plus side (yes, there was a plus side), cash burn at the North Canton, Ohio-based company was cut in half, to just $72 million in negative free cash flow this Q1 -- as opposed to the $162 million in cash it burned one year ago.

Now what

Despite the worst-than-expected GAAP results, Diebold also held fast to its previously issued guidance. The company continues to believe that full-year revenue will run from $4.4 billion to $4.5 billion, with positive "adjusted EBITDA" (not the same as GAAP profits) of between $380 million and $420 million. Diebold will also continue to make progress on stamping out its cash fire. Indeed, by year end, Diebold projects breakeven free cash flow, with capital expenditures of $80 million fully paid for by $80 million in cash from operations.

Long story short, Diebold's news wasn't great -- but I suspect it was a whole lot better than investors are giving Diebold credit for today.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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