Diebold Nixdorf, Incorporated's (NYSE:DBD) Prospects Need A Boost To Lift Shares

Diebold Nixdorf, Incorporated's (NYSE:DBD) price-to-sales (or "P/S") ratio of 0.4x might make it look like a buy right now compared to the Tech industry in the United States, where around half of the companies have P/S ratios above 1.3x and even P/S above 4x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

View our latest analysis for Diebold Nixdorf

What Does Diebold Nixdorf's Recent Performance Look Like?

Recent revenue growth for Diebold Nixdorf has been in line with the industry. Perhaps the market is expecting future revenue performance to dive, which has kept the P/S suppressed. If not, then existing shareholders have reason to be optimistic about the future direction of the share price.

Keen to find out how analysts think Diebold Nixdorf's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Diebold Nixdorf's Revenue Growth Trending?

Diebold Nixdorf's P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

Taking a look back first, we see that the company managed to grow revenues by a handy 2.9% last year. Still, lamentably revenue has fallen 3.9% in aggregate from three years ago, which is disappointing. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Turning to the outlook, the next year should bring diminished returns, with revenue decreasing 0.1% as estimated by the two analysts watching the company. That's not great when the rest of the industry is expected to grow by 6.5%.

With this information, we are not surprised that Diebold Nixdorf is trading at a P/S lower than the industry. However, shrinking revenues are unlikely to lead to a stable P/S over the longer term. There's potential for the P/S to fall to even lower levels if the company doesn't improve its top-line growth.

The Final Word

We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

It's clear to see that Diebold Nixdorf maintains its low P/S on the weakness of its forecast for sliding revenue, as expected. As other companies in the industry are forecasting revenue growth, Diebold Nixdorf's poor outlook justifies its low P/S ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

Don't forget that there may be other risks. For instance, we've identified 3 warning signs for Diebold Nixdorf (1 is potentially serious) you should be aware of.

If these risks are making you reconsider your opinion on Diebold Nixdorf, explore our interactive list of high quality stocks to get an idea of what else is out there.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.