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Factors to Note Ahead of NCR Corporation's (NCR) Q1 Earnings

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NCR Corporation (NCR - Free Report) is set to report first-quarter 2022 results on Apr 26.

The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the same on one occasion, the average surprise being 5%.

For the first quarter, NCR projects revenues between $1.9 billion and $1.95 billion ($1.925 billion at the midpoint). The Zacks Consensus Estimate for revenues is pegged at $1.92 billion, suggesting a 24.7% increase from the year-ago quarter’s reported figure.

Additionally, NCR forecasts adjusted earnings per share in the range of 60-65 cents (62.5 cents at the midpoint). The consensus mark for earnings stands at 64 per share, 25.5% higher than the year-ago quarter’s earnings of 51 cents.

Let’s see how things have shaped up before this announcement.

NCR Corporation Price and EPS Surprise NCR Corporation Price and EPS Surprise

NCR Corporation price-eps-surprise | NCR Corporation Quote

Factors to Note

NCR’s first-quarter performance is likely to have benefited from the strong demand for its software and service solutions across the banking, retail and hospitality industries. The pandemic-induced rapid adoption of digital banking solutions is driving its Banking segment revenues.

The company received positive feedback from customers on the new features and the functionality of its banking solutions. The Zacks Consensus Estimate for the Banking division’s revenues is currently pegged at $1.04 billion, suggesting year-over-year growth of more than 37%.

In light of the pandemic and efforts to lower costs, hospitality-related businesses and food, restaurant, convenience, drug and fuel retail chain operators globally have been seeking technology to automate their processes. This has been driving demand for NCR’s store and work operation automation-related software and service solutions.

In the last reported quarter, the company registered a year-over-year increase in the Retail and Hospitality segments’ revenues of 9% and 27%, respectively. The trend is likely to have continued in the first quarter of 2022.

The Zacks Consensus Estimate for the Retail division’s revenues is currently pegged at $596 million, indicating year-over-year growth of 12%. The consensus mark for the Hospitality business unit suggests revenues to grow approximately 23% year over year and reach $220 million.

NCR’s acquisition of Cardtronics last year is anticipated to have driven the acceleration of the NCR-as-a-service strategy. Cardtronics’ robust debit network further expanded NCR’s payments platform and helped it connect to retail and bank customers, thereby facilitating customer acquisition.

However, elevated component and freight costs are likely to have weighed on NCR’s first-quarter bottom-line performance. Moreover, the company’s planned increase in research and development costs related to higher strategic investments and the inclusion of Cardtronics expenses are anticipated to have negatively impacted operating margins.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for NCR this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Though NCR currently carries a Zacks Rank of 3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, Fabrinet (FN - Free Report) , ON Semiconductor (ON - Free Report) and Fortive (FTV - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.

Fabrinet is slated to report third-quarter fiscal 2022 results on May 2. The company carries a Zacks Rank #2 and has an Earnings ESP of +0.87% at present. Fabrinet’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 5.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for quarterly earnings is pegged at $1.53 per share, suggesting a year-over-year improvement of 26.5%. FN’s quarterly revenues are estimated to increase 20.1% year over year to $575.7 million.

ON carries a Zacks Rank #3 and has an Earnings ESP of +6.67%. The company is scheduled to report first-quarter 2022 results on May 2. ON’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 16.3%.

The Zacks Consensus Estimate for ON’s first-quarter earnings is pegged at $1.05 per share, indicating a year-over-year increase of a whopping 200%. The consensus mark for revenues stands at $1.91 billion, suggesting a year-over-year increase of 28.7%.

Fortive currently carries a Zacks Rank #3 and has an Earnings ESP of +0.30%. The company is slated to report its first-quarter 2022 results on Apr 28. Fortive’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 4%.

The Zacks Consensus Estimate for Fortive’s first-quarter earnings stands at 68 cents per share, implying a year-over-year increase of 7.9%. FTV is estimated to report revenues of $1.35 billion, which suggests growth of 7.1% from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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