NCR - Embedded Expectations Analysis - 2021 10 14
NCR Corporation (NCR:USA) currently trades below historical averages relative to UAFRS-based (Uniform) earnings, with a 12.1x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about revenue growth, the LibertyX and Cardtronics acquisitions, and crypto payment solutions.Specifically, management may lack confidence in their ability to sustain revenue growth, adjusted EBITDA margin expansion, and working capital improvements. In addition, they may be overstating opportunities following the LibertyX acquisition to provide retailers and banks with additional payments solutions, the strength of their liquidity position, and their success cross-selling new products to existing clients on their digital banking platform. Furthermore, management may lack confidence in their ability to develop cryptocurrency payment solutions, meet EPS guidance, and further reduce indirect costs. Moreover, they may have concerns about Cardtronics' revenue growth potential and delays in the Cardtronics integration. Additionally, management may lack confidence in their ability to integrate acquired technologies and products and continue to focus on customer satisfaction initiatives. Finally, they may be concerned about rising premium costs and the pace of recovery of bank ATMs.
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.
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- 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
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