Mike Arnold
Long only, small-cap, tech, growth at reasonable price

NCR Corp.'s Business Model Continues To Evolve

NCR (NYSE:NCR), an acronym for National Cash Register, continues to transform itself into a software-driven business. While hardware remains important (e.g., ATMs), software is the key to NCR's value proposition.

Evidence of the shift from hardware to software can be seen in one key metric: gross margin. In just the last 5 years, consolidated gross margin expanded from 22% and are expected to be in the 31% range in FY2014. To that end, solid low double-digit revenue growth led by software, coupled with margin expansion is key to the investment thesis. Stated differently, there is significant earnings leverage in the NCR economic model.

(click to enlarge)

Value Continues To Be Obscured By Transformation

While Q1 revenue was...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details