NCR Corp. - An Undervalued Name

Summary

• NCR and its peers are struggling to rebound from YTD low in mid-March as market sentiment and future reopening plans remain uncertain.
• Thematic post-COVID shift in operations for all key market segments - Banking, Retail, and Hospitality - provides an interesting look for the company's revival and possible future growth.
• Even with conservative projection, a proven track record of NCR's sustainable cash flows implies a fair valuation of $27.69.

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NCR Corp.: Optimistic on The Rebound, Cautious of the Future

Despite being part of the notoriously resilient Technology Hardware, Storage & Peripherals industry, NCR Corporation (NCR) has yet to recover from the equity sell-off of early March, mainly by its nature of major dependence on the retail sector's clients. Working through the company's latest briefings as well as reports from peers, we believe that a combination of resilience and innovation in younger comps mixed with the grim outlooks from reportable segments are the causes of this softened valuation.

That said, NCR stagnation at 7x P/E proves to be an attractive entry point. With the potential to capitalize on certain post-pandemic banking and retail trends, seasoned management, strong liquidity, and a sustainable business model, we find that the company is trading at a discount of 34.22% and the price target of $27.69, reconciling from our unlevered Discounted Cash Flow model. Here, we are bullish of the name in the short term with an investment horizon of 1-2 years.

Source: Our Discounted Cash Flow Analysis

Company Overview:

NCR is a leading maker of ATMs, point-of-sale (POS) terminals, and self-checkout (SCO) terminals - including its barcode scanners, and related printer consumables such as paper and ink. Since 2015, the company has seen a shift in management due to the involvement with Blackstone, recruiting

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, but may initiate a long position in NCR over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.