NCR CORP. $33 (New York symbol NCR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 164.4 million; Market cap: $5.4 billion; Price-to-sales ratio: 0.9; No dividends paid; TSINetwork Rating: Average; www.ncr.com) is a leading maker of automated teller machines (ATMs), checkout scanners, cash registers and self-serve kiosks.
In February 2013, the company paid $791 million for Israel-based Retalix, whose software helps retailers manage their sales and track inventories. Retailers with a combined 70,000 locations in over 50 countries use Retalix’s products. NCR feels Retalix’s expertise will improve its point-of-sale terminals and self-serve kiosks.
In the three months ended March 31, 2013, Retalix contributed $50 million to NCR’s revenue. That helped push up the total by 13.3% in the latest quarter, to $1.4 billion from $1.2 billion a year earlier. The acquisition should add $255 million to the company’s full-year revenue.
Without unusual items, such as costs to integrate Retalix, earnings rose 27.7%, to $129 million from $101 million. Earnings per share rose 14.9%, to $0.54 from $0.47, on more shares outstanding.
NCR borrowed most of the cash it needed to buy Retalix. That increased its long-term debt to $2.0 billion, which is still a manageable 37% of its market cap. The company also holds cash of $483 million, or $2.94 a share.
Demand for self-serve checkout systems and kiosks continues to rise, because they help retailers cut their operating costs. The improving economy and falling loan losses are also giving banks more money to spend on new ATMs.
As a result, NCR now expects to earn $2.70 to $2.80 a share for all of 2013, up from its earlier forecast of $2.65 to $2.75. The stock trades at just 12.0 times the midpoint of the new range.
NCR is a buy.
