NCR - Embedded Expectations Analysis - 2021 04 08
NCR Corporation (NCR:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with an 18.7x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about the Cardtronics acquisition, organic growth, and margin expansionSpecifically, management may lack confidence in their ability to sustain organic growth and drive further margin expansion. Furthermore, they may have concerns about potential negative feedback surrounding the Cardtronics acquisition and the progress of its completion, the profitability of their underperforming products, and emerging competition for Aloha. They may also lack confidence in their ability to improve growth rates sequentially, mitigate ATM hardware sales decline, and avoid further write downs of inventories in their services business
NCR is a software- and services-led enterprise provider in the financial, retail, hospitality and telecommunications and technology industries. The company is an enterprise provider selling a portfolio of digital first software, services, hardware and payments. The company's segments include: Banking, which includes automated teller machines and payment processing hardware and software; Retail, which provides solutions that primarily include retail-oriented technologies, such as point of sale (POS) terminals and POS software; Hospitality, which provides solutions that include POS hardware and software solutions; and Other, which includes telecommunications and technology solutions.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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