Insiders Are Buying Shares of Diebold

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A Form 4 filed with the SEC has disclosed that Diebold Incorporated (NYSE:DBD)’s Executive Board Chairman, Henry Wallace, purchased 2,000 shares of the company’s stock on March 7th at an average price of $27.97. He now owns slightly more than 21,000 shares when deferred shares are included. We track insider purchases since insiders should generally be averse to increasing their company-specific risks in such a way; when they do buy more shares, it should be more likely to be due to high confidence in the stock price. It turns out that insider purchases are in fact bullish signals. Our database of insider trading filings shows that a member of Diebold’s Board of Directors was buying shares in late February; studies show that these consensus insider purchases are particularly likely- though not certain- to precede good time for the stock price (learn more about studies on consensus insider purchases). Wallace is a former Ford Motor Company (NYSE:F) executive who is also a Board member at Lear Corporation (NYSE:LEA).

Mario Gabelli

Diebold Incorporated is perhaps best known among the general public for its voting machines, but it primarily provides ATMs and other self-service kiosks as well as security solutions for financial and commercial customers. In the fourth quarter of 2012, security revenue was up versus a year earlier but was offset by lower sales in financial self-service and elections sales leading to a small decrease in total revenue. On a geographic basis, the only region to see an improved top line was Europe/Middle East/Africa.

With both costs of goods sold and operating expenses growing, Diebold Incorporated reported only $7.5 million in operating income for the quarter (down from $67 million in Q4 2011) and a net loss. Earnings had actually been higher earlier in 2012 than in the corresponding period in the previous year and the stock is down 10% year to date as the market has reacted. At a market capitalization of $1.8 billion, the stock trades at 23 times trailing earnings but 13 times forward estimates as analysts expect the bottom line to recover. We’d also note that Diebold pays a dividend yield of about 4%.

What big names own Diebold, and how does it compare to its peers?

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