Shares of NCR Corp. (NCR) reached a new 52-week high of $30.70 on Tuesday, May 14, 2013 following a series of deal wins and solid first quarter 2013 results announced on Apr 30.
The closing price of the technology services provider on May 14 was $30.60, representing a robust one-year return of about 36.7% and a decent year-to-date return of about 16.8%. Average volume of shares traded over the last three months stands at approximately 1456K.
NCR delivered positive earnings surprises in the last four quarters with an average beat of 14.5%. This Zacks Rank #2 (Buy) company has a market cap of $5.03 billion and a long-term expected earnings growth rate of 14.8%.
Deal Wins & Recognition
Earlier this week, NCR’s Pulse Real-Time smartphone application was adopted by a “roadside” burger stand, Shake Shack. Then, Elan Financial Services, renowned payment processing services provider, announced that it will use NCR APTRA security software within its network.
Last week, NCR won two automated teller machine (ATM) deals from the Barclays Bank of Ghana and the ANZ bank of New Zealand.
Apart from this, a research conducted by Retail Banking Research showed that NCR still leads in the multivendor ATM space.
Retail Solutions Drive NCR’s First Quarter
NCR reported adjusted earnings of 54 cents per share, surpassing the Zacks Consensus Estimate by 35.0% and the year-ago quarter by 14.9%. The beat was mainly attributable to solid performance in NCR’s Retail Solutions segment.
Revenues of $1.41 billion grew 13.3% year over year, led by a 41.0% rise in Retail solutions and a 16.0% increase in Hospitality revenues. However, the result was partially offset by a 15.0% revenue decline from the Emerging Industries segment.
During the quarter, NCR completed the acquisition of Retalix (announced in Dec 2012), which contributed significantly and supported the growth of Retail Solutions segment.
Guidance
Given the solid first quarter results, growing product demand and continued momentum in Retail Solutions and Hospitality segments, NCR raised its fiscal 2013 guidance.
Revenues for fiscal 2013 are expected to grow in the range of 9.0%–11.0%. NCR expects adjusted earnings per share in the range of $2.70–$2.80, up from previous expectation of $2.65–$2.75.
Estimate Revision
Following the first quarter earnings release, analysts seem to be enthusiastic about NCR’s performance and its new product launches.
Five and three estimates for 2013 and 2014 respectively moved upward over the last 30 days. However, one downward estimate revision each for 2013 and 2014 was noticed in the past 30 days.
Conclusion
NCR’s growing exposure into ATM and self-service kiosk spaces are encouraging, given tremendous growth prospects in the respective markets. Though stiff competition in ATM space, European exposure and high debt burden are concerns, we are optimistic on the stock given continuous products launches and synergies from acquisitions.
Other Stocks to Consider
Other stocks in the technology industry that are currently performing well and have a good visibility include Concurrent Computer Corp. (CCUR), Mentor Graphics (MENT) and Advent Software Inc. (ADVS), all with a Zacks Rank #2 (Buy).
ADVENT SOFTWARE (ADVS): Free Stock Analysis Report
CONCURRENT NEW (CCUR): Free Stock Analysis Report
MENTOR GRAPHICS (MENT): Free Stock Analysis Report
NCR CORP-NEW (NCR): Free Stock Analysis Report
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