Can NCR Corp. (NCR) Surprise this Earnings Season? - Analyst Blog

NCR Corp. NCR is set to report first-quarter 2014 results on Apr 29. Last quarter, the company posted a positive earnings surprise of 3.75%. Let us see how things are shaping up for this announcement.

Growth Factors This Past Quarter

NCR posted mixed fourth-quarter results, with earnings per share beating the Zacks Consensus Estimate but revenues missing the same. However, on a year-over-year basis, both the top and bottom lines increased, primarily due to software revenue growth and an increase in SaaS revenues. The addition of Retalix to the Retail Solutions portfolio also positively impacted total revenue for the quarter.

The company also witnessed margin expansion aided by higher mix of software business. Moreover, NCR provided an encouraging guidance, anticipating balanced revenue growth across its business segments.

Furthermore, 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 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, European exposure and high debt burden are concerns.

Earnings Whispers?

Our proven model does not conclusively show that NCR will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 49 cents. Hence, the difference is 0.00%.

Zacks Rank: NCR's Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #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 some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

ON Semiconductor Corp. ONNN has an Earnings ESP of +6.67% and holds a Zacks Rank #1(Strong Buy).

Level 3 Communications, Inc. LVLT has an Earnings ESP of +10.71% and holds a Zacks Rank #1.