DBD - Embedded Expectations Analysis - 2020 09 15
Diebold Nixdorf, Incorporated (DBD:USA) currently trades below historical averages relative to UAFRS-based (Uniform) earnings, with a 14.6x Uniform P/E. Even at these levels, the market has bullish expectations for the firm, and management is confident about their software business, DN Now transformation, and M&A transactionsSpecifically, management is confident in their ability to create long-term value for investors and grow software revenue. In addition, they are confident they will be realizing higher adjusted EBITDA to free cash flow conversion starting in 2021 and that installations are increasing with far fewer delays. Furthermore, management is confident they are experiencing a steady rebound in self-service transactions, to the point where a number of markets have returned to pre-COVID levels
Diebold Nixdorf is engaged in enabling Connected Commerce?. The company automates, digitizes and transforms the way people bank and shop. The company's integrated solutions connect digital and physical channels for consumers. The company's operating structure is focused on its two customer segments consisting of Banking and Retail. The products for banking customers consist of cash recyclers and dispensers, deposit terminals, teller automation and kiosk technologies, as well as physical security solutions. The retail product portfolio includes modular, integrated and mobile point of sale and self-checkout terminals that meet automation and omnichannel requirements of consumers.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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