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

Simply Wall St ·  Apr 17 09:57

Diebold Nixdorf, Incorporated's (NYSE:DBD) price-to-sales (or "P/S") ratio of 0.3x 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 1.2x and even P/S above 6x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

NYSE:DBD Price to Sales Ratio vs Industry April 17th 2024

What Does Diebold Nixdorf's Recent Performance Look Like?

Diebold Nixdorf certainly has been doing a good job lately as it's been growing revenue more than most other companies. One possibility is that the P/S ratio is low because investors think this strong revenue performance might be less impressive moving forward. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Diebold Nixdorf.

What Are Revenue Growth Metrics Telling Us About The Low P/S?

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.

If we review the last year of revenue growth, the company posted a worthy increase of 8.7%. Still, lamentably revenue has fallen 3.6% 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.

Looking ahead now, revenue is anticipated to climb by 1.9% during the coming year according to the dual analysts following the company. That's shaping up to be materially lower than the 4.1% growth forecast for the broader industry.

With this information, we can see why Diebold Nixdorf is trading at a P/S lower than the industry. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

What Does Diebold Nixdorf's P/S Mean For Investors?

While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

As expected, our analysis of Diebold Nixdorf's analyst forecasts confirms that the company's underwhelming revenue outlook is a major contributor to its low P/S. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. 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 that you should be aware of.

If you're unsure about the strength of Diebold Nixdorf's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.

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