"I'm getting better." ... "No, you're not; you'll be stone dead in a moment." -- from Monty Python and the Holy Grail
Much as I've enjoyed pumping bullets into Diebold
For now, though, things are still pretty much awful. Oh, sure, sales growth looked all right -- up more than 16% -- but margins were down (with or without restructuring charges), and cash flow is looking a bit uglier as well. On that last point, I'd also note that while cash flow is down, it is not out -- it's still free cash flow-positive.
Revenue growth was mixed across the businesses. Security products and services saw a 21% boost, and election systems were up strongly (from a very low base). The lottery business also chipped in about $19 million that wasn't there a year ago. But as Dover's
Diebold management has announced a lot of flashy efforts to try to get this business back on the right track. The folks who lead the company are looking to move financial-terminal production to Eastern Europe, restructure costs out of the business, establish a multiyear improvement plan, and implement an enterprise resource planning (ERP) software system. That's a lot to bite off at one time, especially given the chaos that ERP implantations so often cause with companies.
I'm going to hang on to my skepticism here just a little while longer. I'm hearing the right things from Diebold (for a change), but I'll be even more constructive on the stock when I starting seeing the right things. And with that in mind, you can probably imagine that I'd want a nice, fat discount to fair value to entice me into these shares today.
You'd be right. And I just don't see today's price as quite interesting enough to me. Now, I'm not saying the shares can't or won't go up. In fact, I think there are quite a few investors out there who want to like these shares and will get enthused by incremental signs of progress. I'm just saying that, for my money, I see better options elsewhere.
For more Foolish thoughts on Diebold:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).