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
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
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, 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
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.
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.
Nov. 12, 2015, 7:24 AM
- The $820M investment from Blackstone (NYSE:BX) will take the form of convertible perpetual preferred stock, convertible into NCR common at $30 per share. The stock comes with a 5.5% dividend.
- As reported earlier, the money will be used to help fund a $1B share repurchase, which will be done at a modified Dutch Auction tender to begin tomorrow at an expected price range of $26-$29.50 per share.
- After giving effect to the investment and share repurchase (assuming fully subscribed at the midpoint of the price range), Blackstone will have about a 17% stake in the company on an as-converted basis.
- NCR will expand its board from nine to eleven, appointing two Blackstone MDs upon closing (expected by early Dec.).
- A conference call is set for 8 ET
- NCR +4.5% to $27.98 premarket
- Previously: More on Blackstone/NCR: Over $800M for 15%+ stake (Nov. 11)
Nov. 11, 2015, 5:40 PM
Nov. 11, 2015, 4:26 PM
- The WSJ reports P-E firm Blackstone is close to a deal to buy a minority stake in NCR, and that NCR plans to launch a $1B buyback on Thursday.
- The NY Post reported in September Blackstone decided not to make a bid to acquire NCR after holding buyout talks. Various other P-E firms have also reportedly held talks with the ATM and point-of-sale hardware/software firm.
- NCR has risen to $27.95 after hours.
Oct. 28, 2015, 11:32 AM
- With a Q3 sales miss and EPS beat in town, NCR has cut its 2015 revenue guidance to $6.38B-$6.41B from $6.525B-$6.675B, and upped its EPS guidance to $2.70-$2.80 from $2.60-$2.80. Consensus was at $6.55B and $2.67.
- The revenue guidance cut is blamed on "continued challenges in certain developing markets and slower backlog rollouts pushing into 2016." The EPS guidance hike is attributed to "other expense, effective tax rate and share count [being] lower than previously expected."
- Cloud/SaaS software revenue rose 6% Y/Y in Q3 to $133M, while hardware revenue fell 5% to $616M. Software license/maintenance revenue rose 1% to $158M, professional services fell 3% to $143M, and other services fell 1% to $563M.
- Financial Services (51% of total revenue) was a weak spot, with sales dropping 9% Y/Y. Retail grew 7%, hospitality 5%, and emerging industries 2%. Forex had a 7% impact on total revenue growth (-2% vs. +5%).
- With reports of M&A efforts continuing to pop up, CEO Bill Nuti stated on the earnings call (transcript) NCR's strategic review is ongoing. "I anticipate it will be ongoing now for the next few months, and we'll see where it lands. But right now, there's been no change in that particular analysis."
- Q3 results, PR
Sep. 11, 2015, 9:51 AM
- A day after NCR rose 7.1% following the cancelling of its investor day and a dealReporter column stating buyout talks could resume, shares are adding to their gains with the help of an NY Post report stating a group featuring Blackstone plans to make a bid.
- One source goes as far as to say NCR "has already signed a deal with a mystery buyer who has not yet lined up financing." The Post has frequently reported on NCR buyout talks since June.
Sep. 10, 2015, 10:45 AM
- dealReporter states talks between NCR and P-E firms might restart.
- Is a lower stock price reigniting deal talks? NCR fell sharply in late July after the NY Post reported P-E firm Thoma Bravo had ended its efforts to acquire the company, and that other prospective suitors had also lost interest. Shares fell further in mid-August, and remain down 29% from a 52-week high of $36.50.
Aug. 24, 2015, 4:29 PM
- The Nasdaq opened down 7.5%, furiously rallied almost to breakeven, and then sold off again in the afternoon to close down 3.8%. Some tech stocks managed to rise nonetheless, while many others posted 5%+ declines.
- Major decliners included Citrix (CTXS -9.3%), Solera (SLH -8.9%), NCR (NCR -7.8%), Nuance (NUAN -6.9%), Infinera (INFN -6.4%), HomeAway (AWAY -6.6%), MagnaChip (MX -6.4%), Yandex (YNDX -7.5%), Neustar (NSR -6%), Ebix (EBIX -7.3%), SGI (SGI -8%), Monster (MWW -7.5%), Silver Spring (SSNI -6.6%), Perion (PERI -11%), and Synchronoss (SNCR -7.5%).
- Solera's decline comes 4 days after the company confirmed it's exploring strategic alternatives, and 5 days after Bloomberg reported a sale is being explored. Yandex has been hit hard in recent weeks by the ruble and crude oil's decline. Infinera is down 20% over the last 3 trading days, albeit still up 34% YTD.
- See also: Morning decliners, Chinese tech stocks, large-cap decliners
Jul. 30, 2015, 9:12 AM
- Gainers: UNXL +33%. UNIS +22%. MEET +18%. GEVO +17%. SHOP +15%. OTEX +15%. WWE +15%. SGYP +13%. SKX +12%. MWW +9%. HBP +8%. HOLX +8%. WDC +8%. APD +6%.
- Losers: PRSN -35%. LNCO -21%. LINE -19%. FMI -18%. SSYS -18%. ITG -14%. FOE -13%. WFM -12%. QRVO -12%. OSK -11%. LOCK -11%. DDD -9%. MNKD -7%. NCR -6%. GNCA -6%. FMS -5%. MPC -5%. CROX -5%.
Jul. 30, 2015, 9:10 AM
- The NY Post reports Thoma Bravo has ended its efforts to acquire NCR, and that the company is now "expected to pull the plug on the auction altogether."
- The P-E firm reportedly wasn't "offering much more than the current trading price." Carlyle and Blackstone are said to have previously lost interest.
- NCR has fallen to $28.40 premarket. Shares rose yesterday following the company's mixed Q2 results and full-year free cash flow guidance hike.
Jul. 29, 2015, 10:32 AM
- After beating Q2 EPS estimates and slightly missing on revenue, NCR is reiterating full-year guidance for revenue of $6.525B-$6.675B and EPS of $2.60-$2.80 (consensus is at $6.54B and $2.65). However, free cash flow guidance has been hiked by $25M to $350M-$400M.
- Q3 revenue guidance of $1.63B-$1.65B is below a $1.67B consensus. A strong dollar is expected to have a 2% impact on 2015 revenue growth.
- Meanwhile, when asked on the earnings call (transcript) about NCR's strategic review, CEO William Nuti stated the review is ongoing and expected to "conclude in the near future." The remarks come amid a flurry of M&A reports.
- Cloud/SaaS revenue rose 8% Y//Y in Q2 to $135M. However, hardware revenue fell 2% to $622M, software license/maintenance revenue 2% to $168M, professional services 8% to $137M, and other services 6% to $542M. Forex had a 7% impact on total revenue growth. Within verticals, financial services revenue fell 7%, retail was flat, hospitality up 1%, and emerging industries up 2%.
- Q2 results, PR
Jul. 20, 2015, 2:53 PM
- Sources tell dealReporter Thoma Bravo and Blackstone are prepping competing buyout offers for NCR (NCR +1.8%), and that final bids are due soon.
- Shares have turned positive after spending most of the day down moderately. They rose on Friday after Reuters reported Thoma Bravo is talking with P-E investors and banks to put together a bid worth ~$9B (after factoring debt).
- NCR currently has a $5.2B market cap, and had $3.2B in net debt at the end of Q1. Q2 results arrive on July 28.
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