KeyBanc: Diebold's New CEO Executing Well, But Long-Term Growth Remains A Concern

Diebold Nixdorf Inc DBD delivered a fourth-quarter revenue and EBITDA beat Wednesday and raised its cost savings target. Yet the company’s growth continues to be lower than peers and industry conditions are worsening, according to KeyBanc Capital Markets.

The Analyst

KeyBanc’s Josh Beck maintains a Sector Weight rating on Diebold Nixdorf.

The Thesis

Diebold Nixdorf reported adjusted revenue at $1.29 billion, representing 7-percent growth and beating Street expectations of $1.23 billion. Adjusted EBITDA came in at $127 million.

The  financial technology company achieved a 9.8-percent margin, despite a lower-margin retail revenue mix. The margin benefited from progress with the "DN Now" cost initiative, Beck said in a Thursday note. 

The company’s backlog grew by 1 percent and orders by 10 percent year-on-year. The DN Now cost savings target for 2021 has been raised from $250 million to $400 million, suggesting that the new CEO is executing well, the analyst said. 

KeyBanc reduced the revenue estimate for 2019 to $4.45 billion to reflect a decline in services growth — although with higher product revenue. The sell-side firm raised its EBITDA estimate for 2019 to $400 million.

Diebold Nixdorf’s stock is trading at a multiple close to peers, despite the company’s lower growth and margins.

Price Action

Diebold Nixdorf shares were up 9.79 percent at $8.13 at the time of publication Friday. 

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