It has been about a month since the last earnings report for NCR . Shares have added about 5.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NCR due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
NCR Q1 Earnings & Revenues Surpass Estimates
NCR’s first-quarter non-GAAP earnings of 51 cents per share surpassed the Zacks Consensus Estimate of 47 cents. Moreover, the reported figure soared 65% year over year on higher revenues and cost reductions.
The company’s revenues of $1.54 billion topped the consensus mark marginally. The top-line figure also increased 3% year over year on a reported basis mainly driven by solid growth across the company’s retail and hospitality segments, partially offset by softness in the banking division.
Quarter Details
Banking revenues edged down 1% year over year to $756 million, primarily due to lower hardware sales, muted by higher software and services revenues to an extent.
Retail revenues increased 13% to $532 million, chiefly on growth in point-of-sale and self-checkout revenues, as well as higher services revenues.
Hospitality revenues grew 6% to $179 million, primarily driven by an increase in point-of-sale revenues, as well as elevated services revenues.
The company’s Digital Banking Solution witnessed solid momentum. Digital banking registered users climbed 13% year on year.
Margins
Non-GAAP gross profit of $425 million was up 5.2% year over year. Non-GAAP gross margin expanded 60 basis points (bps) to 27.5%. Higher revenues and improved productivity are the key reasons behind these improvements in gross profit and margin.
Non-GAAP operating expenses declined 7.7% year on year to $277 million, chiefly on the company’s cost-cutting initiatives to address the pandemic’s impact on the business. The firm’s cost-cutting measures, included salary reductions, curtailing travels, and elimination of certain contractors.
Non-GAAP operating income increased to $148 million from the year-ago quarter’s $104 million. Non-GAAP operating margin expanded 270 bps to 9.6% from the year-earlier quarter’s 6.9%.
Other Financial Details
NCR ended the March-end quarter with cash and cash equivalents of $319 million compared with the $338 million reported during the December-end quarter.
Free cash inflow totaled $98 million compared with the prior quarter’s $20 million. Net cash provided by operating activities was $155 million during the first quarter.
Notably, NCR suspended its share-repurchase program and merger and acquisition activities, and cut senior employee salaries among other cost-containment measure during first-quarter 2020, in order to strengthen the company’s liquidity position.
Additionally, on Mar 24, the company withdrew the remaining available funds of $630 million from its five-year, $1.1-billion revolving credit facility. Also, on Apr 13, the company issued $400 million of senior unsecured notes.
Furthermore, the company deleveraged its balance sheet by $200 million in August 2020 through redeeming $1.3 billion of debt and issuing $1.1 billion of debt.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 10.71% due to these changes.
VGM Scores
Currently, NCR has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, NCR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is NCR (NCR) Up 5.6% Since Last Earnings Report?
It has been about a month since the last earnings report for NCR . Shares have added about 5.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NCR due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
NCR Q1 Earnings & Revenues Surpass Estimates
NCR’s first-quarter non-GAAP earnings of 51 cents per share surpassed the Zacks Consensus Estimate of 47 cents. Moreover, the reported figure soared 65% year over year on higher revenues and cost reductions.
The company’s revenues of $1.54 billion topped the consensus mark marginally. The top-line figure also increased 3% year over year on a reported basis mainly driven by solid growth across the company’s retail and hospitality segments, partially offset by softness in the banking division.
Quarter Details
Banking revenues edged down 1% year over year to $756 million, primarily due to lower hardware sales, muted by higher software and services revenues to an extent.
Retail revenues increased 13% to $532 million, chiefly on growth in point-of-sale and self-checkout revenues, as well as higher services revenues.
Hospitality revenues grew 6% to $179 million, primarily driven by an increase in point-of-sale revenues, as well as elevated services revenues.
The company’s Digital Banking Solution witnessed solid momentum. Digital banking registered users climbed 13% year on year.
Margins
Non-GAAP gross profit of $425 million was up 5.2% year over year. Non-GAAP gross margin expanded 60 basis points (bps) to 27.5%. Higher revenues and improved productivity are the key reasons behind these improvements in gross profit and margin.
Non-GAAP operating expenses declined 7.7% year on year to $277 million, chiefly on the company’s cost-cutting initiatives to address the pandemic’s impact on the business. The firm’s cost-cutting measures, included salary reductions, curtailing travels, and elimination of certain contractors.
Non-GAAP operating income increased to $148 million from the year-ago quarter’s $104 million. Non-GAAP operating margin expanded 270 bps to 9.6% from the year-earlier quarter’s 6.9%.
Other Financial Details
NCR ended the March-end quarter with cash and cash equivalents of $319 million compared with the $338 million reported during the December-end quarter.
Free cash inflow totaled $98 million compared with the prior quarter’s $20 million. Net cash provided by operating activities was $155 million during the first quarter.
Notably, NCR suspended its share-repurchase program and merger and acquisition activities, and cut senior employee salaries among other cost-containment measure during first-quarter 2020, in order to strengthen the company’s liquidity position.
Additionally, on Mar 24, the company withdrew the remaining available funds of $630 million from its five-year, $1.1-billion revolving credit facility. Also, on Apr 13, the company issued $400 million of senior unsecured notes.
Furthermore, the company deleveraged its balance sheet by $200 million in August 2020 through redeeming $1.3 billion of debt and issuing $1.1 billion of debt.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 10.71% due to these changes.
VGM Scores
Currently, NCR has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, NCR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.