Market Sentiment Around Loss-Making Diebold Nixdorf, Incorporated (NYSE:DBD)

February 11, 2020

Diebold Nixdorf, Incorporated's (NYSE:DBD): Diebold Nixdorf, Incorporated provides connected commerce solutions to financial institutions and retailers in North America, the Asia Pacific, Europe, the Middle East, Africa, and Latin America. With the latest financial year loss of -US$568.7m and a trailing-twelve month of -US$342.3m, the US$905m market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on DBD’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for DBD, its year of breakeven and its implied growth rate.

See our latest analysis for Diebold Nixdorf

Consensus from the 3 Tech analysts is DBD is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$103m in 2021. DBD is therefore projected to breakeven around a couple of months from now! What rate will DBD have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 109%, which is rather optimistic! If this rate turns out to be too aggressive, DBD may become profitable much later than analysts predict.

NYSE:DBD Past and Future Earnings, February 12th 2020

I’m not going to go through company-specific developments for DBD given that this is a high-level summary, however, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one issue worth mentioning. DBD currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

There are key fundamentals of DBD which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at DBD, take a look at DBD’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further examine:

Valuation: What is DBD worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether DBD is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Diebold Nixdorf’s board and the CEO’s back ground.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

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