Diebold Nixdorf (DBD) is a leading global technology company, providing businesses in the financial and retail industries with solutions that enable them to conveniently, securely and efficiently transact with their customers, notes growth stock expert Taesik Yoon, editor of Forbes Investor.


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Diebold is the biggest global servicer of automated teller machines (ATMs), point of sale (POS) terminals, self-checkout (SCO) systems and other distributed IT assets that allow banking and retail customers to meet the growing demand for transaction availability. 

Cutting guidance never goes well with investors. And the bigger the cut, the bigger the hit to a company’s stock. 

So perhaps no one should be surprised to see shares of transaction processing solutions provider Diebold Nixdorf tumble nearly 23% right after the company slashed its full-year earnings guidance in early July and remain more than 30% below their high in early March.

No doubt some investors see this as an indication that the substantial and transformative acquisition of Wincor Nixdorf, a leading global provider of IT solutions for the banking and retail industries, in August 2016 is not living up to the company’s lofty expectations. 

Yet given that the biggest reasons for DBD’s recent profit warning originates from elsewhere—such as deal closings that are taking longer than expected and prolonged installation schedules on business already booked.


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As such,  we don’t think either jeopardizes the company’s ability to realize the significant profit growth anticipated over the longer term from the acquisition.  This makes the steep sell-off in DBD’s stock well overdone in our view.

As for the Wincor Nixdorf acquisition, it’s not too unusual for there to be a few hiccups when integrating a business that effectively doubles your annual revenue.

What’s relevant is whether these issues will impair DBD from realizing the full benefits originally expected from the acquisition over the longer term.  We don’t believe that to the case.

To the contrary, bolstered by increased visibility on the combined cost structure of the two firms DBD now expects the acquisition to yield annual cost synergies of $240 million by the end of 2020, up from its prior estimate for $200 million.

We estimate that these expected synergies alone have the potential to add more than $1.50 to the company’s annual adjusted earnings per share run-rate once fully realized.

DBD’s revised full-year outlook still implies growth of as much as 50% from the prior year.  More importantly, as much of this is likely to be weighed towards the 4th quarter, we think the company will enter 2018 with the kind of momentum that can help it achieve the lofty growth in profits originally anticipated in the current year.

Given the nice rebound DBD’s shares have begun to enjoy over the past month, others seem to agree.  Yet with the stock still down more than 30% from early March, we think it can continue to go much higher from here.

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