Should You Buy It? Diebold

The company posted mixed fourth-quarter results back on Feb. 4. Earnings came in at 40 cents a share, matching the consensus analyst estimate. Revenue fell 6% from the previous year to $823 million, which was $31.6 million below expectations.

Diebold's 2009 earnings guidance of $2.10 to $2.40 a share also came in below the previous consensus analyst estimate. Management's revenue guidance for a 2% to 10% decline is equally wide and shows a lack of visibility.

The company is seeing lower demand from banks for ATM systems, as customers are trying to cut back spending in the midst of the current financial crisis. Diebold is also hurt by the stronger dollar, as the company generates about 26% of its total revenue outside of the U.S. management is targeting $100 million of cost cutting to help offset the lower demand.

Diebold's dividend appears secure, but I believe that readers should hold off from buying the stock at current levels because the demand outlook remains murky because of the macroeconomic environment.

As a result, I believe Diebold shares could reach the high-teens, at which point the attractive dividend yield should help provide a floor for the stock.

---

Check out David Peltier's "Value Investor" for more stock picks that can weather today's economic downturn. Along with his recommendations, you will also have access to his model portfolio and his expertise on position management and exit strategies -- essentials in succesful value investing. Click here for a special limited-time offer.

---

Know what you own: Other business equipment companies include Xerox (XRX Quote), Pitney Bowes (PBI Quote), Coinstar (CSTR Quote), Steelcase (SCS Quote), Herman Miller (MLHR Quote) and HNI (HNI Quote). For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.