NCR Completes Divestment Of Remaining IPS Assets To Turbon

NCR Corporation (NYSE:NCR) recently announced the sale of the remaining assets of its Interactive Printer Solutions (IPS) division — located in the Middle East and Africa (MEA) region — to Interactive Printer Solutions FZCO (IPS FZCO), a part of the Turbon Group of Companies.

The deal included the IPS manufacturing facilities of Jebel Ali Free Zone in Dubai, IPS distribution centers and its employees. Per the latest contract, the acquirer will maintain a commercial relationship with NCR post the transaction. This sale marks the last phase of the divestment that was announced in 2016. The first phase of the sale of the IPS division to Atlas Holdings was completed in May 2016.

Notably, NCR’s technological solutions (both products and services) — having the likes of automated teller machines (ATMs), self-service kiosks and point of sale (POS) devices as well as software applications that help in customer interaction — are a part of the core infrastructure in today’s connected economy.

We believe the completion of the transaction is a testament to the fact that NCR is focusing on its growth in the software and services sector, which will help it rebound going ahead. NCR stock has lost 22.9% year to date, compared to the industry's decline of 13.1%.

Factors Influencing the Stock

Per the company, “ATM orders continue to be negatively impacted by large customer delays in spending in North America, weakness in India, the Middle East and Africa, and the upcoming Windows 10 conversion.”

Consequently, this is affecting NCR’s top-line performance. For third-quarter 2017, the company’s hardware revenues decreased 6% year over year on a reported basis to $578 million. The segment revenues from ATM and SCO also declined 16% and 24%, respectively.

Nevertheless, the company is gaining in Software and Services revenues which increased 2% and 3%, respectively, on a year-over-year basis in the third quarter. This represented increase in Cloud, Professional Services and Software maintenance revenues as well as hardware maintenance growth.

However, the weakness in the ATM market has been a potent threat for the company, which in turn negatively impacted the margins and the guidance for full-year 2017.

Going forward, we believe the company’s focus on its core competencies and streamlined cost structure to be beneficial.

Zacks Rank and Key Picks

NCR carries a Zacks Rank #3 (Hold).

Some of the better-ranked stocks in the broader technology sector are Intel Corp. (NASDAQ:INTC) , NetApp, Inc. (NASDAQ:NTAP) and IPG Photonics Corp. (NASDAQ:IPGP) sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected EPS growth rate for Intel, NetApp and IPG is projected to be 8.42%, 11.34% and 12%, respectively.

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