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NCR Shares Up More Than 3%: Can the Rally Continue Further?

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NCR Corporation (NCR - Free Report) shares have added about 3.2% in yesterday’s trading session, outperforming the market.

In the last one year, its shares have gained 18.9%, against the industry’s loss of 12.7%.

Will the recent momentum sustain in the long haul or is it due for a pullback?

Let's take a quick look at the fundamentals and recent trends in order to get a better understanding of the catalysts.

Growth Drivers

NCR is one of the world’s leading consumer transaction technology providers. The company’s growing exposure in the self-service kiosk space is encouraging, given the tremendous growth prospects. The company has been the global leader in self-service ATMs for several years in terms of market share. The company remains the largest supplier of ATM machines in Asia-Pacific and North America while maintaining leadership in the Asian and European markets.

Per the latest report by global research company RBR Research, the global installed base of ATMs is expected to reach 4 million units by 2021 from 3.2 million units at the end of 2015. The Asia-Pacific, Middle East and Africa are expected to lead growth. India and China will continue to be the largest contributors of growth. Currently, India is the world’s fourth-largest ATM market with China, the United States and Japan holding the first three spots. This creates huge opportunities for companies like NCR.

Going forward, global research company RBR recently acknowledged NCR as the world’s #1 point-of-sale (POS) software provider for the retail and hospitality industries.

Per the latest report by RBR Research, the POS market approximately had 1,000 projects in 2016 by more than 40 sellers. This report also stated that NCR, with a market share of 18%, is way ahead of peers which had more than 6.6 million POS installations globally in these dynamic industries.

According to Global Market Insights, the global market size for POS terminals will reach $103.52 billion by 2023. The report also says that POS terminals market size, which at the end of 2015 was 32 million units, will reach 126 million units by 2023, reflecting a CAGR of 18.3% through the period. Consequently, NCR with its varied offerings of POS terminals and solutions should be able to capitalize on these growth opportunities.

Most recently, NCR announced that it has inked a deal with Performance Food Group Company (PFGC - Free Report) , the food and food-related products distributor, targeting the restaurant industry. Per the deal, Performance Food Group (PFG) will implement NCR’s cloud-based POS platform, NCR Silver, to restaurants in the United States.

Furthermore, continuous product launches, growing popularity of its self-service offerings and synergies from acquisitions are catalysts. Continuous deal wins also drive growth.


On the valuation front too, the stock looks attractive. The company currently trades at a forward P/E multiple of 11.1x, significantly lower than the industry average of 15.1x. The ratio, which is obtained by dividing a stock’s current market price with its historical or estimated earnings, measures how much an investor needs to shell out per dollar of earnings. Therefore, lower the P/E of a stock, the better for investors.

Notably, the stock carries a Zacks Rank #3 (Hold). Last quarter, the company posted a positive earnings surprise of 6.67%.

To Conclude

In our opinion, the stock deserves a place in investor’s portfolio and we are expecting an impressive return from the stock in the next few months.

Better-ranked stocks worth considering are NVIDIA Corporation (NVDA - Free Report) and Micron Technology, Inc. (MU - Free Report) , both sporting a  Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected EPS growth rate for NVIDIA and Micron is 10.3% and 10%, respectively.

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