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Diebold Nixdorf (DBD) Stock Price In Danger Of Sinking To Lows Not Seen Since Last Century!

Summary

Board of Directors fired previous CEO Thomas Swidarski in Jan 2013 after posting poor earnings

Under current CEO Any Mattes watch, stock has fallen nearly 30%

Diebold Nixdorf continues to highlight earnings as key focus-metric

Diebold might benefit from increasing it's focus on other metrics the market rewards from Diebold Nixdorf

Diebold (now Diebold Nixdorf) was once a great American company, but I fear they will be sold for parts in the near future if they don’t shift their focus FAST!

Diebold Nixdorf continues to highlight and focus recovery efforts on Revenue, Net Income and EPS as key focus-metrics. Case in point, the 2017 Action Plan recently presented to investors basically stated they were going to sell better, create some quality initiatives and close facilities / terminate hundreds of employees. All to achieve better results in Revenue, Net Income and EPS.

But is this working to drive share price and market capitalization? Not if you ask the market as a whole!

Thomas W. Swidarski was forced out as CEO on Jan 19, 2013 after the company posted poor earnings in 2012 and Andy Mattes was appointed CEO in June 2013. Since Mattes took over the helm at Diebold Nixdorf in June of 2013, Diebold Nixdorf’s stock price has fallen approximately 30% - Yikes! 

Furthermore, Diebold Nixdorf’s stock price is 28% lower today that it was the day before Swidarski was forced out.

Please don’t misunderstand me; I am not passing judgment on either Swidarski nor Mattes as leaders, but what I am saying is that the culture, and resulting focus-metrics (primarily earnings), most likely driven from the Board, are not what the collective market rewards Diebold Nixdorf for. 

But how can Diebold Nixdorf drive sustained stock price improvement and avoid plummeting below the $20 mark they haven’t seen since last century (March of 1999)?

They might consider shifting their focus from historically comfortable focus-metrics to those that the market as a whole values and take a data-driven approach to honing in on the metrics that provide a direct line of sight to increased shareholder value.

Different metrics (for example as determined via ThinkHill’s proprietary algorithm Predictive Value Equationᵀᴹ – PVEᵀᴹ) appear to provide more historically accurate and statistically significant correlation to Diebold Nixdorf actual stock price than Diebold Nixdorf’s current focus-metrics.

For example, one of the ‘different’ metrics that ThinkHill’s PVEᵀᴹ suggests is Days Inventory Outstanding (DIO). DIO is one of the metrics that ThinkHill’s PVEᵀᴹ has determined to be a driver of Diebold Nixdorf’s stock price. Viewed in combination with the additional elements of ThinkHill’s PVEᵀᴹ, Diebold Nixdorf might have a better idea as to what metrics and levers to focus on in order to correlate to increased shareholder value.

Following is a historical comparison leveraging ThinkHill's PVEᵀᴹ:

Diebold Nixdorf might be better served allocating scarce resources (dollars and people) to improvement projects (or a revised “Action Plan”) that create positive movement in the levers that actually correlate to shareholder value (below is a sample roadmap of how ThinkHill’s PVEᵀᴹ provides direct line of sight to improvement projects) if they hope to achieve sustained increases in shareholder value and market capitalization.

Once they start to improve the metrics the market truly values, then they may begin to see sustained positive momentum in their stock price and not cross into last century’s sub $20 territory. My concern is that Diebold Nixdorf’s culture and their Board’s ingrained continued focus on primarily earnings may impede any necessary course corrections.

We will see….

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.