New Banking Deal for NCR

The world’s largest ATM manufacturer NCR Corporation (NCR - Analyst Report) recently bagged yet another major bank deal. Peoples Bank of Alabama announced that it has deployed NCR SelfServ ATMs with the company’s scalable deposit module (SDM) in order to quicken the deposit portion of an ATM transaction.

As per the deal, the bank will enhance its transaction processing by using the advanced NCR software, including NCR APTRA Passport across its ATM network. The bank will deploy 30 NCR SelfServ ATMs with SDM, which allows consumers to deposit both cash and checks simultaneously, in any orientation, through a single slot. This consumer-friendly technology makes ATM deposits faster and easier, and helps banks enhance the customer experience.

Over the years, the deployment of off-premise ATMs has increased steadily. Financial institutions are looking to extend their brands' presence and serve customers as per their requirements. Approximately half of all ATMs across the world are located at a distance from a bank. As much as 69% of ATMs in the U.K. are off-premise.

We remain highly positive on NCR Corp.’s ATM footprint. We remain encouraged by the company’s association with leading banks, such as Barclays Bank plc (BCS - Snapshot Report) and UniCredit Bank, which have upgraded their ATMs with advanced banking solutions from NCR Corp. According to a study published by Retail Banking Research, NCR has been the world's largest supplier of multi-vendor ATM middleware and applications for 24 consecutive years.

This apart, after the recent management meet, some industry experts believe that NCR is in the early phase of the Regional/Mid-size bank upgrade cycle and estimates that only 35,000 of the approximate150,000-175,000 total regional/mid-sized bank-owned ATMs will be upgraded to enhance automation by the end of the year. During the third quarter, NCR reported around 300% order growth in ATMs at regional U.S banks, thus providing it with a good platform heading into 2012.

Strong performance across all the company’s segments led to solid third quarter results. Moreover, geographical contributions were significant. We are also encouraged by the fiscal year guidance, and believe that the company is well positioned to deliver solid momentum across all its businesses.

We remain optimistic about the growth trajectory in the company’s core financial and retail business, as well as the recently acquired Radiant business. Although we acknowledge some uncertainty in the company’s entertainment segment, this is not material enough to completely offset the strength in its fundamentals.

NCR has a Zacks #2 Rank, implying a short-term Buy rating.

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