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What’s in the Offing for NCR Corp (NCR) in Q2 Earnings?


NCR Corporation NCR is set to report second-quarter fiscal 2017 results on Jul 20. Last quarter, the company delivered a positive earnings surprise of 20.7%. In all the trailing four quarters, the company has outperformed the Zacks Consensus Estimate. This represents an average positive earnings surprise of 10.9%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

NCR has been the global leader in self-service ATMs for several years in terms of market share. The company remains the largest supplier of ATM machines in the Asia-Pacific and North America while maintaining its leadership in the Asian and European markets.

The company reported encouraging first-quarter 2017 results. Also, revenues and earnings increased on a year-over-year basis, primarily on strong growth in its software business.

NCR recently announced that its APTRA OptiCash software will be deployed by Banca Comerciala Româna ("BCR"), a financial group in Romania and a member of Erste Group, across its network. We believe that the installation will help year-over-year cost savings on cash management services.

The company recently won a deal from Japanese Restaurant and Jazz venue, Yoshi, for its restaurant operations transformation. Per the deal, the restaurant will implement NCR’s point-of-sale (POS) platform which will not only help it modernize its outlets but also enhance customers’ experience by reducing transaction time.

According to Don Zimmerman, general manager at NCR Hospitality, “As the leader in hospitality technology, we want to make everyday easier for restaurant operators with the best possible software solutions for their business to help increase revenues and bottom line results.”

By 2020, RBR Research expects India to install base similar to the size of the U.S., trailing only China. Currently, India is the world’s fourth largest ATM market, with China, the U.S. and Japan holding the first three spots. This creates huge opportunities for companies like NCR.

Continuous product launches, growing popularity of its self-service offerings and synergies from acquisitions are key catalysts. Continuous deal wins also drive growth.

However, similar offerings from the likes of Diebold Corp. and International Business Machines Corp. IBM remain concerns.

Earnings Whispers

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

Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate are pegged at 75 cents per share. Hence, the difference is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: NCR carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of companies which, as per our model, have the right combination of elements to post an earnings beat this quarter:

Moody's Corporation MCO has an Earnings ESP of +4.51% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Check Point Software Technologies Ltd. CHKP has an Earnings ESP of +0.90% and a Zacks Rank #3.

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