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?

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

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

Has Ingenico Done VeriFone A Favor?

VeriFone (NYSE:PAY) is a curious company. It is about to operate in a duopoly that arguably should not exist - who would have thought that there would be just two providers of electronic payment solutions for credit, debit and gift card transactions? It also happens to carry a rather rich multiple. 

What makes the situation even more interesting today is that its sole pure-play rival may have inadvertently done the company a major favor. If rumors and numerous press accounts are accurate, Ingenico (perhaps under some pressure from the French government) rejected a buyout bid from American conglomerate Danaher (NYSE:DHR).    

The Deal That Wasn't 

According to those same sources, Danaher offered $1.9 billion, or about 28 euros per share, for Ingenico. Although that deal would not have represented much of a premium to the stock's recent trading price, these shares were below 16 euros before the summer began. Then again, a $1.9 billion bid would not represent all that much of a premium in terms of multiples either. Based on analyst expectations, that deal would represent only 1.6 times sales and less than 10 times EBITDA - relatively meager given that VeriFone trades at approximately twice those multiples.

    
Not Just About the Money? 
If reports are to be believed, it was not just the valuation of the deal that was an issue. Apparently, the French government sees Ingenico as some sort of "essential" company to France's electronics industry and is not willing to see a foreign company acquire it.

Please click below for the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Has-Ingenico-Done-VeriFone-A-Favor-PAY-DHR-NCR-NVS-SNY-GDF-KKR1223.aspx