Diebold Nixdorf, Incorporated's (NYSE:DBD) price-to-sales (or "P/S") ratio of 0.2x 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 1x and even P/S above 5x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.
Diebold Nixdorf certainly has been doing a good job lately as its revenue growth has been positive while most other companies have been seeing their revenue go backwards. It might be that many expect the strong revenue performance to degrade substantially, possibly more than the industry, which has repressed the P/S. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.Keen to find out how analysts think Diebold Nixdorf's future stacks up against the industry? In that case, our free report is a great place to start.
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 4.0%. Ultimately though, it couldn't turn around the poor performance of the prior period, with revenue shrinking 6.5% in total over the last three years. 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 3.0% during the coming year according to the dual analysts following the company. That's shaping up to be similar to the 4.0% growth forecast for the broader industry.
In light of this, it's peculiar that Diebold Nixdorf's P/S sits below the majority of other companies. Apparently some shareholders are doubtful of the forecasts and have been accepting lower selling prices.
Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.
We've seen that Diebold Nixdorf currently trades on a lower than expected P/S since its forecast growth is in line with the wider industry. Despite average revenue growth estimates, there could be some unobserved threats keeping the P/S low. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.
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 strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).
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