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On Thursday, one of my top 10 stocks for 2012 reported earnings. NCR Corporation (NYSE:NCR), a leader in financial ATMs, kiosks, retail, and hospitality solutions, beat analysts across revenue and earnings per share targets. First-quarter revenue was $1.24 billion, which was an increase of 18% from last year's first quarter. Earnings per share were reported at $0.47(non GAAP). That is an increase of 42% ($0.33) from the first quarter of 2011. The earnings also beat the $0.37 expected from analysts. This marks the fourth consecutive earnings beat for the company.

Broken down by segment:

Financial Services

Revenue: $694 Million

Increase: +17%

Operating Income: $56 Million ($47 Million in 2011)

Retail Solutions

Revenue: $347 Million

Increase: -9%

Operating Income: $2 Million ($8 Million in 2011)


Revenue: $113 Million

Increase: N/A

Operating Income: $19 Million (N/A)

The company's financial segment remains its core market and is generating great returns on earnings and adding to the company's installation backlog. During the earnings release CEO Bill Nuti had this to say, "Our strong first-quarter results were driven by continued momentum in our financial services business, particularly among U.S. regional banks and in emerging markets worldwide." I think the Travel segment and Hospitality segment could prove to be big growth drivers for the company.

I read an interesting piece recently on the potential NCR's Travel unit has with airports. Tyler Craig, who is general manager and vice president of NCR Travel said, "Airports today get nearly 50 percent of their revenue from non-aviation sources. By employing some of the technologies used by today's retailers such as mobile marketing and interactive, digital signage, airports can more effectively communicate with and make offers to travelers, boosting revenue while making their airports more welcoming, entertaining and user-friendly." The article talks about how many airport travelers don't know where to find restaurants or stores in the time they have in between flights. This is where NCR's travel software comes into play. The company's NCR Wayfinding software allows travelers to see interactive maps of airports. Along with the Wayfinding software, the travel segment also offers:

  • Airport and Airline Check-in
  • NCR Car Rental
  • NCR Hotel

Backlog at the end of the first quarter now sits at $1.17 billion for NCR. This is only $7 million away from the all time first-quarter record for the company. This is the tenth quarter in a row with an increase in backlog totals from the previous year. The total five percent order increases also do not include the Hospitality business. Additional backlog orders were placed in that business segment during the quarter and it continues to be an area of focus for NCR.

The Hospitality segment recently scored a big contract with Sonic Drive-Ins (NASDAQ:SONC). Over 3,500 locations will use NCR solutions to provide great customer service. The deal shows that a large restaurant sees the benefit of using NCR hardware and software and this could lead to many big deals in the future.

Another exciting moment during the conference call came with the teaser for NCR silver. The product will be discussed further during a May Investor Day. The company called it a "potential game changer," which is always nice to hear from a company that you are following. The technology will allow retailers to use iPads and iPhones from Apple (NASDAQ:AAPL) as a form of payment from their customers. There are many companies entering the mobile payments segment. NCR promises to provide small businesses and retailers with its customer care and software technology. I think this could be a great growth driver for the company in its undervalued Hospitality segment.

For the current second quarter, analysts are expecting $0.56 per share. This would mark a 22% increase from last year's second quarter. Analysts were expecting earnings per share of $2.43 for fiscal 2012, but that number is likely to change with the first-quarter earnings beat.

NCR forecasted revenue to increase 11-13% for fiscal 2012. The company is forecasting earnings per share in the range of $2.40-$2.47. Free cash flow is expected to come in at $100-$150 million for the year. In a February article I wrote about NCR, the company had previously called for 2012 earnings of $2.36-$2.45. This could mark the first of many earnings outlook raises for the company.

NCR shares hit a 52-week high and their highest mark in over three years during Friday's trading session. Shares now sit at $23.21, which is above my earlier price target of $21.80. In my first quarter top 10 picks review, I set a new price target of $30. Shares are up 41.6% since the beginning of the year when I first recommended them. I think the company has plenty of growth and could really transform with new product launches and a growing backlog in hospitality and travel segments. Take a second look at this company and consider buying on dips.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NCR over the next 72 hours.