NCR CORP. $33 (New York symbol NCR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 167.9 million; Market cap: $5.5 billion; Price-to-sales ratio: 0.9; No dividends paid; TSINetwork Rating: Average; www.ncr.com) gets 52% of its revenue from ATMs. It also makes cash registers and self-serve checkouts (32% of revenue) and kiosks for theatres and arenas (10%). Maintenance services supply the other 6%. Overseas markets account for 60% of NCR’s revenue.
In the quarter ended March 31, 2014, NCR’s revenue rose 7.7%, to $1.5 billion from $1.4 billion a year earlier. That’s partly due to its January 2014 purchase of privately held Digital Insight Corp., whose software helps over 1,000 banks and credit unions manage their online and mobile transactions.
NCR paid $1.65 billion for this firm, which should add $350 million to its yearly revenue. Earnings fell 14.5%, to $53 million from $62 million. Pershare earnings declined 16.2%, to $0.31 from $0.37, on more shares outstanding.
Excluding unusual items, earnings per share fell 7.4%, to $0.50 from $0.54. That’s mainly because NCR borrowed the cash it needed to buy Digital Insight, which pushed up its interest costs.
The company’s long-term debt of $3.9 billion is a high 71% of its market cap. However, it recently reorganized its employee pension plans, which should free up cash for debt repayments. NCR also holds cash of $515 million, or $3.07 a share.
The stock trades at a moderate 10.8 times the company’s forecast 2014 earnings of $3.05 a share.
NCR is a buy.
