A month has gone by since the last earnings report for NCR Corporation . Shares have lost about 11.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
NCR Q1 Earnings & Revenues Beat, Increase Y/Y
Keeping its earnings streak alive for the 15th time in a row, NCR reported better-than-expected results for the first quarter of 2017. The company’s non-GAAP earnings (excluding divestiture and liquidation losses and other one-time items) per share from continuing operations of $0.56 surpassed the Zacks Consensus Estimate of $0.46 and surged 47.4% year over year.
The company’s quarterly earnings also came ahead of the guided range of $0.43–$0.48. The robust bottom-line performance was primarily driven by strong top-line growth along with efficient cost management and lower share count.
Quarter in Detail
The company’s revenues of $1.478 billion beat the Zacks Consensus Estimate of $1.460 billion and increased 2.4% on a year-over-year basis. On a constant currency basis (i.e. excluding FX impact and IPS business divesture), revenues were up 9% year over year.
During the quarter, the company witnessed strong growth in Software business which benefited from continued expansion of its cloud and software license offerings.
During second-quarter 2016, NCR modified its reportable segments to reflect changes in the reporting structure of the organization. The new reportable segments are Software, Services and Hardware segments.
The company’s Software revenues on a reported basis were up 8% to $452 million. The year-over-year increase in software revenues was primarily due to 29%, 6% and 6% increase in Software license, Cloud and Professional Services revenues, respectively.
Services revenues increased 3% to $557 million.
Hardware revenues however decreased 3% on a year-over-year basis and came in at $469 million. In the Hardware segment, revenues from ATM and IPS declined 8% and 94%, respectively, while that from SCO and POS surged 124% and 17%, respectively. The increase in SCO and POS revenues was primarily due to store transformation growth during the quarter.
Non-GAAP gross profit for the quarter increased 9.1% and came in at $432 million, primarily due to higher revenues. Also, non-GAAP gross margin was 29.2%, up 180 basis points (bps) from the year-ago quarter.
Income from operations on a non-GAAP basis was $160 million, up from $139 million a year ago. Also, operating margin expanded 120 bps on a year-over-year basis, primarily due to strong execution as well as better productivity.
Non-GAAP net income from continuing operations was $87 million compared with $61 million in the year-ago quarter.
Balance Sheet & Cash Flow
The ATM and POS manufacturer exited the quarter with cash and cash equivalents of approximately $401 million, down from $498 million in the previous quarter. Receivables were $1.29 billion compared with $1.28 billion in the previous quarter.
However, NCR has a highly-leveraged balance sheet. The company ended the quarter with $3.1 billion of long-term debt in its book.
In the first quarter, the company generated operating cash flow of $43 million and free cash flow was ($12) million.
During the quarter, the company repurchased $350 million of its common stock. Concurrent with its first-quarter earnings release, the company announced that it intends to make share repurchases worth $300 million.
Guidance
Buoyed by the better-than-expected first quarter performance, NCR raised its revenue and earnings outlook for 2017. However, the second-quarter guidance was slightly disappointing.
For the year, the company now anticipates revenues in the range of $6.63–$6.75 billion (previous guidance was $6.60–$6.72 billion). Non-GAAP earnings per share are now expected in the range of $3.32–$3.42 (previously $3.25–$3.35).
The company continues to expect operating cash flow in the range of $805 million to $830 million and free cash flow between $500 million and $525 million.
Coming to the second-quarter outlook, NCR expects revenues in the range of $1.59–$1.62 billion (mid-point $1.605 billion).
The company expects non-GAAP earnings per share for the second quarter in the range of $0.72–$0.77 (mid-point $0.745).
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.
VGM Scores
At this time, NCR's stock has a nice Growth Score of 'B'. On the momentum front also, it has a score of 'B'. 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.
Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for growth and momentum.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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NCR Corp (NCR) Down 11.8% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for NCR Corporation . Shares have lost about 11.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
NCR Q1 Earnings & Revenues Beat, Increase Y/Y
Keeping its earnings streak alive for the 15th time in a row, NCR reported better-than-expected results for the first quarter of 2017. The company’s non-GAAP earnings (excluding divestiture and liquidation losses and other one-time items) per share from continuing operations of $0.56 surpassed the Zacks Consensus Estimate of $0.46 and surged 47.4% year over year.
The company’s quarterly earnings also came ahead of the guided range of $0.43–$0.48. The robust bottom-line performance was primarily driven by strong top-line growth along with efficient cost management and lower share count.
Quarter in Detail
The company’s revenues of $1.478 billion beat the Zacks Consensus Estimate of $1.460 billion and increased 2.4% on a year-over-year basis. On a constant currency basis (i.e. excluding FX impact and IPS business divesture), revenues were up 9% year over year.
During the quarter, the company witnessed strong growth in Software business which benefited from continued expansion of its cloud and software license offerings.
During second-quarter 2016, NCR modified its reportable segments to reflect changes in the reporting structure of the organization. The new reportable segments are Software, Services and Hardware segments.
The company’s Software revenues on a reported basis were up 8% to $452 million. The year-over-year increase in software revenues was primarily due to 29%, 6% and 6% increase in Software license, Cloud and Professional Services revenues, respectively.
Services revenues increased 3% to $557 million.
Hardware revenues however decreased 3% on a year-over-year basis and came in at $469 million. In the Hardware segment, revenues from ATM and IPS declined 8% and 94%, respectively, while that from SCO and POS surged 124% and 17%, respectively. The increase in SCO and POS revenues was primarily due to store transformation growth during the quarter.
Non-GAAP gross profit for the quarter increased 9.1% and came in at $432 million, primarily due to higher revenues. Also, non-GAAP gross margin was 29.2%, up 180 basis points (bps) from the year-ago quarter.
Income from operations on a non-GAAP basis was $160 million, up from $139 million a year ago. Also, operating margin expanded 120 bps on a year-over-year basis, primarily due to strong execution as well as better productivity.
Non-GAAP net income from continuing operations was $87 million compared with $61 million in the year-ago quarter.
Balance Sheet & Cash Flow
The ATM and POS manufacturer exited the quarter with cash and cash equivalents of approximately $401 million, down from $498 million in the previous quarter. Receivables were $1.29 billion compared with $1.28 billion in the previous quarter.
However, NCR has a highly-leveraged balance sheet. The company ended the quarter with $3.1 billion of long-term debt in its book.
In the first quarter, the company generated operating cash flow of $43 million and free cash flow was ($12) million.
During the quarter, the company repurchased $350 million of its common stock. Concurrent with its first-quarter earnings release, the company announced that it intends to make share repurchases worth $300 million.
Guidance
Buoyed by the better-than-expected first quarter performance, NCR raised its revenue and earnings outlook for 2017. However, the second-quarter guidance was slightly disappointing.
For the year, the company now anticipates revenues in the range of $6.63–$6.75 billion (previous guidance was $6.60–$6.72 billion). Non-GAAP earnings per share are now expected in the range of $3.32–$3.42 (previously $3.25–$3.35).
The company continues to expect operating cash flow in the range of $805 million to $830 million and free cash flow between $500 million and $525 million.
Coming to the second-quarter outlook, NCR expects revenues in the range of $1.59–$1.62 billion (mid-point $1.605 billion).
The company expects non-GAAP earnings per share for the second quarter in the range of $0.72–$0.77 (mid-point $0.745).
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.
NCR Corporation Price and Consensus
NCR Corporation Price and Consensus | NCR Corporation Quote
VGM Scores
At this time, NCR's stock has a nice Growth Score of 'B'. On the momentum front also, it has a score of 'B'. 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.
Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for growth and momentum.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.