One of the biggest stories of last week was how Diebold Nixdorf, Incorporated (NYSE:DBD) shares plunged 27% in the week since its latest annual results, closing yesterday at US$8.74. It looks like the results were pretty good overall. While revenues of US$4.4b were in line with analyst predictions, statutory losses were much smaller than expected, with Diebold Nixdorf losing US$4.45 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what analysts’ statutory forecasts suggest is in store for next year.
Following the recent earnings report, the consensus fromthree analysts covering Diebold Nixdorf expects revenues of US$4.26b in 2020, implying a small 3.3% decline in sales compared to the last 12 months. Statutory losses are forecast to balloon 67% to US$1.49 per share. Before this earnings announcement, analysts had been forecasting revenues of US$4.27b and losses of US$0.92 per share in 2020. So there’s definitely been a decline in analyst sentiment after the latest results, noting the large cut to new EPS forecasts.
As a result, there was no major change to the consensus price target of US$14.67, with analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Diebold Nixdorf analyst has a price target of US$18.00 per share, while the most pessimistic values it at US$9.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
In addition, we can look to Diebold Nixdorf’s past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 3.3% a significant reduction from annual growth of 15% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 6.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – analysts also expect Diebold Nixdorf to grow slower than the wider market.
The Bottom Line
The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Diebold Nixdorf’s revenues are expected to perform worse than the wider market. The consensus price target held steady at US$14.67, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for Diebold Nixdorf going out to 2021, and you can see them free on our platform here..
It might also be worth considering whether Diebold Nixdorf’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.