Will NCR Corp (NCR) Disappoint This Earnings Season?
NCR Corp. (NCR) is set to report the third-quarter 2014 results on Oct 23. Last quarter, the company posted a positive earnings surprise of 3.03%. Let us see how things are shaping up for this announcement.
Factors This Past Quarter
NCR reported mixed second-quarter 2014 results, wherein the bottom line beat the Zacks Consensus Estimate but the top line missed the same. The company witnessed margin expansion aided by a higher mix of software business.
NCR’s growing exposure into ATM and self-service kiosk spaces is encouraging, given tremendous growth prospects in the respective markets. Continuous product launches, growing popularity of its self-service offerings and synergies from acquisitions are the catalysts. Continuous deal wins also remain NCR’s strong point. Moreover, NCR has strengthened its position in the point of sale (:POS) market through the integration of Radiant Systems.
However, softness in the ATM business in mature markets and competition from Diebold, Inc. (DBD) remain the concerns.
Also, owing to a difficult retail market condition, unfavorable foreign exchange rates and a sluggish macro economic environment, the company revised down its non-pension operating income (:NPOI) to $204 million from an earlier forecast of $215 to $225 million. The company’s revenues for the quarter to increase 9% compared with an earlier guidance of 10% to 12% growth.
The company toned down the fiscal 2014 guidance as well. The company expects revenue growth in the range of 7% to 8% compared with 10% to 12% growth projected earlier. The company also revised down its NPOI from $900–$920 million to $810–$830 million and non-GAAP earnings from $3.00–$3.10 to $2.60–$2.70 per share.
Earnings Whispers?
Our proven model does not conclusively show that NCR is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, that is not the case here due to the following factors:
Zacks ESP: NCR’s ESP is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate stand at 66 cents per share.
Zacks Rank: NCR currently has a Zacks Rank #5 (Strong Sell).
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are a couple of other companies, which you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Facebook, Inc. (FB), with an Earnings ESP of +6.25% and a Zacks Rank #2 (Buy)
Western Digital Corp (WDC), with an Earnings ESP of +0.98% and a Zacks Rank #3 (Hold).
Read the Full Research Report on WDC
Read the Full Research Report on NCR
Read the Full Research Report on FB
Read the Full Research Report on DBD
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