Is NCR Still A Sheep In Wolf's Clothing?
Stephen Simpson, CFA
Stephen Simpson, CFA
NCR Corp. Still Undervalued, But Not Helping Its Cause
Stephen Simpson, CFA
Stephen Simpson, CFA
Yesterday, 4:16 PM
Mon, Jul. 25, 5:35 PM
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Tue, Jun. 7, 4:40 PM
- In addition to missing FQ2 EPS estimates (while beating on revenue), VeriFone (NYSE:PAY) is guiding for FQ3 revenue of $515M and EPS of $0.40, well below a consensus of $552.1M and $0.59.
- In addition, the point-of-sale hardware/software firm now expects FY16 (ends in October) revenue of $2.1B and EPS of $1.85, below a consensus of $2.16B and $2.23.
- CEO Paul Galant: "Q2 was a mixed quarter for Verifone as we grew our business, but experienced several difficult market dynamics. As a result, it is necessary for us to adjust for these risks and update our outlook for FY16 to $2.100 billion dollars of revenue and $1.85 of earnings per share. We are aggressively executing mitigating actions including a headcount restructuring and a review of underperforming businesses."
- Non-GAAP gross margin fell 40 bps Y/Y in FQ2 to 42.4%. Operating expenses rose 9.4% Y/Y to $190.6M (compares with 7.4% revenue growth). VeriFone ended FQ2 with $157M in cash and $955M in debt.
- VeriFone is down 27.7% after hours to $20.40. Rival NCR is down 1.6% to $31.20.
- VeriFone's FQ2 results, earnings release
Tue, Apr. 26, 5:56 PM
- NCR logged a beat on Q1 profits (and a narrow miss on revenues) in a quarter marked by a beginning to its business transformation initiative.
- Software and Services mix improved, as software revenue gained 1% to $419M and service revenues grew 4% to $543, offset by hardware revenue that fell 11% to $482M.
- Gross margin (non-GAAP) was $396M, down from $407M.
- Revenue breakout: Products, $548M (down 9.3%); Service, $896M (up 2.8%).
- Guidance was mixed, with a forecast for Q2 revenue of $1.56B-$1.58B (ahead of expected $1.55B) and non-GAAP EPS of $0.60-$0.65 (light of expected $0.71, but including impact from divestiture of the Interactive Printer Solutions business as well pension expenses and forex headwinds).
- For full 2016, it's forecasting revenues of $6.25B-$6.35B (vs. expected $6.2B) and non-GAAP EPS of $2.90-$3.00 -- up from a previous $2.85-$2.95, and ahead of expected $2.89.
- Shares are flat in after-hours trading.
- Conference call link
- Press Release
Tue, Apr. 26, 4:20 PM
Mon, Apr. 25, 5:35 PM
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Fri, Mar. 11, 5:08 PM
- VeriFone (PAY +6.2%) rallied to its highest levels since December after beating FQ1 estimates and issuing strong FY16 (ends Oct. '16) guidance: Revenue of $2.15B-$2.17B and EPS of $2.21-$2.24 vs. a consensus of $2.1B and $2.16. Point-of-sale hardware/software peer NCR (NCR +4.5%) also outperformed on a day the S&P rose 1.6%.
- VeriFone's FQ2 guidance is for revenue of $530M and EPS of $0.51-$0.52 vs. a consensus of $515.3M and $0.51. FY16 free cash flow guidance remains at $175M.
- A 7.7% Y/Y increase in systems revenue (to $337.6M) fueled VeriFone's FQ1 sales beat. Services revenue rose 1.8% to $175.9M. EPS received a lift from cost controls - GAAP operating expenses rose only 1.8% Y/Y to $179.1M - and $80M worth of stock repurchases.
- On the earnings call (transcript), CEO Paul Galant talked up VeriFone's Chinese opportunity. "In China, we achieved our China national entity certification as well as seven individual product certifications in January. This allows us to now compete for the device business of the country's top five banks for the first time in over a year. These five banks account for roughly half of China's $700 million-plus device market ... we expect the start of revenue growth in China in the second half of 2016, and this will accelerate significantly through 2017 and beyond."
- VeriFone's FQ1 results, earnings release
Tue, Mar. 1, 5:44 PM
- NCR has acquired CimpleBox, a provider of cloud-based back-office apps for restaurant owners and retailers, for an undisclosed sum.
- The purchase continues a multi-year effort by NCR to grow its software exposure. In 2012, the company struck a $650M deal to buy point-of-sale software provider Retalix.
- NCR notes CimpleBox's software (aimed at SMBs) is already integrated with the company's NCR Silver mobile point-of-sale product line, and proclaims it "helps businesses reduce the amount of time spent on manual processes, consolidates data and scheduling across multiple sites and gives management visibility into the business and day-to-day operations."
Tue, Feb. 16, 3:05 PM
- Plenty of tech companies are posting outsized gains on a day the Nasdaq is up 2%. Not surprisingly, many of the standouts are companies that have been hammered since New Year's.
- Notable gainers include action camera leader GoPro (GPRO +12.9%) and GoPro video processor supplier Ambarella (AMBA +6.2%), threat-prevention tech provider FireEye (FEYE +11.2%), supercomputer maker Cray (CRAY +19.5%), chip packaging/testing firm ChipMOS (IMOS +17.8%), point-of-sale hardware/software firm NCR (NCR +9.7%), Web hosting/domain registration firm GoDaddy (GDDY +9%), and driver-assistance system provider Mobileye (MBLY +7.4%). FireEye fell on Friday in the wake of its Q4 report.
- Other big gainers: RF chipmakers Skyworks (SWKS +6.4%) and Qorvo (QRVO +8.9%), 4G modem/M2M module maker Sierra Wireless (SWIR +8%), microcontroller/flash memory maker Cypress Semi (CY +7.5%), microphone maker Knowles (KN +8%), inventory-tracking hardware firm Zebra Technologies (ZBRA +8.5%), cloud HR software firm Paylocity (PCTY +7.8%), cloud collaboration/chat software firm Atlassian (TEAM +10.5%), touch controller/display driver vendor Synaptics (SYNA +7.8%), and online P2P lender LendingClub (LC +14.2%). LendingClub rallied last week after posting a Q4 beat and announcing a $150M buyback.
- Previously covered: Solar stocks, Chinese tech stocks, Groupon, Sonus, Black Box, Canadian Solar, Palo Alto Networks, Qualcomm
Tue, Feb. 9, 6:58 PM
- NCR has used its Q4 report to guide for 2016 revenue of $6.1B-$6.2B and EPS of $2.72-$2.82, below a consensus of $6.59B and $2.92. Free cash flow is expected to rise to $425M-$475M from 2015's $409M and 2014's $313M. The guidance is said to reflect forex headwinds, pension expenses, and the pending sale of NCR's commercial printing supplies unit (expected to close in Q2).
- Q1 guidance is for revenue of $1.44B-$1.45B and EPS of $0.30-$0.35, below a consensus of $1.49B and $0.52.
- Top-line performance: Hardware revenue fell 12% Y/Y in Q4 to $631M, software license/maintenance 7% to $176M, and professional services 6% to $149M. Cloud/SaaS revenue rose 4% to $134M, and other services 2% to $590M. Financial Services revenue -11% Y/Y, Hospitality +10%, Retail Solutions and Emerging Industries flat.
- Financials: Lifting Q4 EPS: Gross margin rose 390 bps Y/Y to 28.8%, GAAP SG&A spend fell by $34M to 254M, and R&D spend fell by $22M to $55M. Following its $820M Blackstone investment and $1B accelerated buyback, NCR ended 2015 with $328M in cash and over $3.2B in debt.
- NCR is unchanged after hours for now.
- NCR's Q4 results, earnings release
Tue, Feb. 9, 4:16 PM
Mon, Feb. 8, 5:35 PM
Mon, Jan. 25, 10:03 AM
- Liking NCR's valuation following its recent selloff, Northcoast Research's Kartik Mehta has upgraded the point-of-sale hardware/software provider to Buy ahead of its Feb. 9 Q4 report. His target is $26.
- NCR had dropped 16% in 2016 as of Friday's close. Shares currently go for just 7.3x a 2016 EPS consensus of $2.94. The company had ~$17/share in net debt at the end of September; since then Blackstone has invested $820M via convertible preferred stock.
Thu, Jan. 7, 9:45 AM
- P-E firm Atlas Holdings is buying NCR's (NCR -2%) Interactive Printer Solutions (IPS) business, which provides printer supplies for hardware (inc. ATMs and point-of-sale systems) used by retail, financial, hospitality, e-commerce, warehousing, distribution, and manufacturing clients. Terms are undisclosed.
- The deal is expected to close in Q2, and includes IPS' manufacturing facilities and distribution centers. It arrives two months after NCR announced an $820M investment from Blackstone.
- NCR is following equity markets lower in early trading.
Dec. 14, 2015, 8:26 AM
- The "Dutch auction" tender offer, expired at 12:00 midnight, New York City time, on Friday.
- A total of approximately 41.2M shares of NCR's common stock were validly tendered and not validly withdrawn at or below a purchase price of $26.75 per share, including approximately 21M shares that were tendered through notice of guaranteed delivery.
- In accordance with the terms and conditions, the company expects to repurchase approximately 37.4M shares at a purchase price of $26.75 per share on a pro rata basis, which will be accepted in full, for a total cost of approximately $1B, excluding fees and expenses related to the tender offer.
- NCR +0.9% premarket
Dec. 3, 2015, 12:21 PM
- Asserting NCR's (NCR -2.3%) recent deal to sell a 17% stake to Blackstone for $820M has "unclear" value, Oppenheimer has downgraded the ATM and point-of-sale hardware/software provider to Perform.
- Oppenheimer: "While we acknowledge the stock is cheap, we elect to watch this strategy shift from the sidelines until we gain a better understanding of the deal's benefits, future FCF and potential for capital returns."
- The firm is worried about the deal's high interest payments, and a dearth of details about NCR's potential ROI for an expensive growth strategy. It recommends investors tender their shares in the $1B Dutch auction/buyback tied to the Blackstone investment.
- NCR is nearly flat since the Blackstone deal was first reported on Nov. 11.
NCR Corp. engages in the development, manufacture, and sale of consumer transaction solutions. It operates through the following segments: Financial Services, Retail Solutions, Hospitality, and Emerging Industries. The Financial Services segment provides automated teller machines, payment... More
Industry: Information Technology Services
Country: United States
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