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NCR Corp. (NCR - Analyst Report) is scheduled to release its second quarter 2012 results on July 19, 2012 and we see some variation in the analysts’ estimates at this point.

Fourth Quarter Recap

NCR Corp.posted first quarter 2012 earnings per share of 47 cents, in line with the Zacks Consensus Estimate.

Revenue during the first quarter was $1.24 billion, up 17.6% from $1.06 billion in the year-ago quarter. Financial services generated revenues of $694.0 million in the quarter, up 17.3% year over year. Total orders improved 5.0% on a year-over-year basis.

NCR reported net income of $38.0 million or 23 cents per diluted share in the reported quarter compared with $19.0 million or 12 cents per diluted share in the year-ago quarter. Excluding special items like impairment, pension expense, acquisition related transaction cost, amortization and legal settlement charges; non-GAAP income from continuing operations stood at 47 cents per diluted share compared with 33 cents per diluted share in the prior-year quarter.

The company expects full-year 2012 revenues to increase in the range of 11.0% to 13.0%. GAAP diluted earnings per share are expected in the range of $1.48 to $1.55 and non-GAAP diluted earnings per share, is expected to be in the range of $2.40 to $2.47 per diluted share.

Agreement of Analysts

Out of the 8 analysts providing estimates for the June quarter one analyst raised the estimate in the last 30 days. However, for the September quarter, one out of the 8 analysts lowered the estimate while none moved in the opposite direction. For fiscal 2012, three analysts made downward revisions in the last 30 days.

Analysts are of the opinion that the company has a sustainable business model in place that will help them to drive its long-term targets. Management is strengthening its financial services, hospitality (Radiant) and retail portfolios to increase penetration in new markets and having a diversified business model. Moreover, the company is also concentrating on its core ATM business and also remains committed to taking a share of emerging growth verticals, such as travel, telecom and technology.

Some analysts are also of the opinion that large ATM manufacturers like NCR Corporation and Diebold, Incorporated will likely benefit from the strong momentum among different banks, as they are focusing on better security needs and ADA compliance.

Moreover, management also intends to expand the operation of the recently acquired Radiant business in the US and abroad.

On the other hand, seasonal factors also affect NCR’s sales, with the first quarter bringing lower revenue and the fourth quarter generating higher revenue each year. Such seasonal nature of the business leads to fluctuation in cash flows and makes it difficult for the company to determine working capital requirements.

Magnitude of Estimate Revisions

The magnitude of revisions for the second quarter of 2012 is minimal, since the company reported its first quarter results. Overall, the Zacks Consensus Estimate for the upcoming quarter has moved up by a penny over the last 90 days to 59 cents.

The estimate for fiscal 2012, improved by 6 cents over the last 90 days to $2.47, while for 2013, it moved up by 13 cents to $2.72 over the last 90 days.

Recommendation

NCR reported modest first quarter results, with revenues improving across most of its business segments and geographical regions. We are encouraged by the fiscal year guidance, but the company must come up with innovative business ideas to fuel growth.

With the restructuring plan in place and integration of the Radiant system, the company is expected to drive revenue going forward. Although the restructuring initiatives have begun impacting the results and demand is picking up, we believe that the company will take some more time to come up with better results.

The company has a Zacks #3 Rank, implying a short-term Hold rating.

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