Seeking Alpha: Is NCR Still A Sheep In Wolf's Clothing?

NCR (NYSE:NCR) has generally told a good story over the years, pointing to the emerging market growth opportunities in ATMs, the growth offered by branch transformation and increased service offerings in the U.S. banking sector, and the opportunities in retail and hospitality, particularly from software. It hasn't really worked out, though. The company's revenue has been growing modestly on a constant currency basis, and although the company has made strides with its free cash flow generation, the shares are down about a quarter from when I last wrote on them about two years ago.

I don't disagree that there are growth opportunities in the markets that NCR serves that could underpin mid single-digit or higher long-term growth. The problem, in my view, is that companies like Oracle (NYSE:ORCL), VeriFone (NYSE:PAY), Ingenico (OTCPK:INGIY), and Global Payments (NYSE:GPN)/Heartland Payments (NYSE:HPY) have increasingly blurred the lines in the hardware and software spaces within retail and hospitality and I'm concerned that NCR just doesn't have the vision and the portfolio to really leverage those opportunities.

The upcoming Investor Day could be an opportunity for the company to lay out some bold transformative strategies for the company, but I'm very concerned that it'll be more of the same, (a lot of promises, but weak delivery) and I just don't see a reason to mess around with a company that has had numerous opportunities to reestablish its growth credibility.

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Is NCR Still A Sheep In Wolf's Clothing?

Seeking Alpha: NCR Corp. Still Undervalued, But Not Helping Its Cause

When I last wrote on NCR (NCR) in December of 2013, I thought that NCR's acquisition of Digital Insight was a good move, but that ongoing skepticism about the company's pension status, FCF conversion, and ability to drive synergies across the business would likely keep the stock from realizing its significant upside over the next year.

With the shares basically flat in the five months since (and likely down once trading opens on Wednesday), I can't say I'm disappointed or surprised with the company's performance. The key to the NCR story remains its comprehensive hardware and software toolbox for financial institutions, its growth prospects within the retail and hospitality industries, and its conversion toward higher-margin software sales. NCR still gets the opposite of the benefit of the doubt from the Street and still offers attractive upside from these levels, though management has to start generating better FCF conversion and guidance to realize that upside.

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NCR Corp. Still Undervalued, But Not Helping Its Cause

Investopedia: NCR Transforming, But The Street Seems Up To Speed

NCR (NYSE:NCR) has already gone a long way toward transforming itself from a tired, slow-growing manufacturer of ATM and point of sale (POS) hardware to a more dynamic payments technology company. In addition to addressing client needs for more front-end productivity, NCR has really augmented its faster-growing software and service operations. The only downside to the story is valuation, as today's valuation already assumes that these moves will meaningfully upgrade the company's future cash flows.

Please read more here:
http://www.investopedia.com/stock-analysis/082013/ncr-transforming-street-seems-speed-ncr-dbd-ibm-pay.aspx

Seeking Alpha: VeriFone Now A Falling Knife

Questioning the valuation of a growth stock is a good way to fill up your inbox with hostile emails, but VeriFone (PAY) is offering up a case study in why valuation always matters. While the company is still growing, and still has an attractive global market opportunity, multiple missteps have led to a one-two punch of lower estimates and substantially lower multiples on those estimates. Although these shares may finally be resetting to a point where the valuation makes it appealing, management is going to have a long road back to reestablishing credibility with the Street.

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VeriFone Now A Falling Knife

Investopedia: NCR Accelerates Its Diversification, But At A High Cost

Build-versus-buy is a familiar debate for most companies, and many ultimately decide to do both. That has been the case with NCR (NYSE:NCR), as this company continues to transition and diversify away from its historical reliance on ATM and point of sale (POS) hardware. The November 28 announced deal for Retalix (Nasdaq:RTLX) is going off at a high price for NCR, but it's a logical deal for the company, and past experience with the Radiant transaction should give investors a little more confidence in the long-term worth of this move.

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http://www.investopedia.com/stock-analysis/2012/NCR-Accelerates-Its-Diversification-But-At-A-High-Cost-NCR-RTLX-DBD-PAY1130.aspx

Investopedia: NCR An Interesting Mix Of Growth And Stability

Increasing automation is a fact of life, and NCR (NYSE:NCR) has a central role in making that happen. Dealing with ATMs instead of tellers is a long since accepted practice, and customers have either chosen or been forced to accept automated kiosks in lieu of working with human workers in a variety of other industries. Although NCR isn't likely to post torrid growth, the overall growth and value balance looks interesting.


ATMs a Solid Base
To a large extent, the North American ATM market is a replacement market where Diebold (NYSE:DBD) and Wincor Nixdorf have built a fairly lucrative industry with huge barriers to new entrants. For related reading, see The Ins And Outs Of Bank Fees.


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Investopedia: NCR Buys Its Way Into Another Vertical

Sometimes, organic growth just takes a little too long, or costs a little too much. NCR (NYSE:NCR), a maker of a variety of ATMs, self-service kiosks and point-of-sale terminals, announced that it has reached a deal to acquire Radiant Systems (Nasdaq:RADS) in an all-cash deal. Assuming this deal goes through to completion, NCR will significantly bolster its hospitality market presence and give it a third major industry group alongside finance and retail. 

NCR's Deal  
NCR announced that it will be acquiring Radiant Systems in a cash deal that values Radiant at $28 per share - about a 30% premium for Radiant shareholders. At a deal value of $1.2 billion, Radiant is going out for a little bit more than three times the forward revenue estimate and a trailing EV/EBITDA ratio around 15. That's a pretty healthy valuation, relative to Radiant's historical multiples, not to mention its likely forward free cash flow. (For related reading, see Taking Stock Of Discounted Cash Flow.)

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http://stocks.investopedia.com/stock-analysis/2011/NCR-Buys-Its-Way-Into-Another-Vertical-NCR-RADS-IBM-DBD-PAR0713.aspx

4 Companies That Should Have Sold Out

Mergers and buyouts are part and parcel of the investing experience. While a buyout bid can give a nice return to a short-term investor, longer-term investors often fret that a bid may entice management to sell a company for less than its true long-term value. What is also true, though, is that sometimes managers are unreasonably and unproductively stubborn - refusing to hand over the reins (and their large executive salaries) and allow shareholders to book a profit or own shares in a larger enterprise. (For related reading, take a look at Mergers: The Sign Of Economic Recovery?)

With news swirling around 3Par's (NYSE:PAR) willingness to sell to either Dell (Nasdaq:DELL) or Hewlett-Packard (NYSE:HPQ), there is the sharp contrast of Genzyme's (Nasdaq:GENZ) resistance to a bid from Sanofi-aventis. Let us take a look at examples where shareholders really would have been better-served if their managers had signed on the dotted line and taken the deal. (Find out how you can cash in, read Trade Takeover Stocks With Merger Arbitrage.)

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http://stocks.investopedia.com/stock-analysis/2010/4-Companies-That-Should-Have-Sold-Out-PAR-DELL-HPQ-GENZ-MSFT-YHOO-ERTS-TTWO-UTX-DBD-CPWM-PIR0909.aspx