Diebold (DBD) Stock Plunges After Announcing Wincor Nixdorf Acquisition - TheStreet

NEW YORK (TheStreet) -- Diebold  (DBD) - Get Report stock is plummeting by 8% to $34.51 in mid-morning trading on Monday, after the ATM maker announced that it was buying WincorNixdorf

The North Canton, OH-based financial services company will buy Wincor, a German company that provides IT services to the financial industry, for $1.8 billion, the company announced in a statement today.

The combined company will be named Diebold Nixdorf and will trade on the New York Stock Exchange and the Frankfurt Stock Exchange, the statement said.

If the deal goes through, the combined company would be the world's largest ATM maker, the Wall Street Journal reports.

"The rate of change we see in our industry is unprecedented, and by leveraging innovative solutions and talent from both organizations we will have the scale, strength and flexibility to help our customers through their own business transformation," Diebold CEO Andy Mattes said in a statement. "Our new company will be well positioned for growth in high-value services and software - particularly in the areas of managed services, branch automation, mobile and omnichannel solutions - across a broader customer base."

The combined company will pursue a total addressable market worth about $60 billion, Diebold said.

Separately, TheStreet Ratings team rates DIEBOLD INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate DIEBOLD INC (DBD) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DIEBOLD INC's earnings per share declined by 35.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DIEBOLD INC turned its bottom line around by earning $1.76 versus -$2.85 in the prior year. This year, the market expects an improvement in earnings ($1.79 versus $1.76).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Computers & Peripherals industry and the overall market on the basis of return on equity, DIEBOLD INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The revenue fell significantly faster than the industry average of 25.6%. Since the same quarter one year prior, revenues fell by 11.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • After a year of stock price fluctuations, the net result is that DBD's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • The gross profit margin for DIEBOLD INC is currently lower than what is desirable, coming in at 27.17%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.18% significantly trails the industry average.
  • You can view the full analysis from the report here: DBD

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.