NCR Corp. (NCR) Touches 52-Week High: Should You Buy?

Shares of NCR Corp. (NYSE:NCR) hit a new 52-week high of $34.21 on Aug 24, 2016, eventually closing at $33.74. The shares have been particularly buoyant in recent times, jumping 7.9% over the past one month. The closing share price also represents a strong one-year return of 40.9% and a year-to-date return of 37.9%.

The price increase was supported by a significant rise in share volume. Average volume of shares traded over the last three months stands at approximately 988.7K.

NCR delivered positive earnings surprises in the last four quarters with an average beat of 10.8%. This Zacks Rank #2 (Buy) company has a market cap of $4.22 billion.

What is Driving the Stock Upward?

This price appreciation can be attributed to NCR’s growing exposure in the ATM and self-service kiosk spaces, given the tremendous growth prospects in the respective markets. Continuous product launches, growing popularity of its self-service offerings and synergies from acquisitions are the catalysts.

The company has been the global leader in self-service ATMs for several years in terms of market share. Per the latest report by global research company RBR Research, the global installed base of ATMs is expected to increase at a CAGR of 44.0% from 2012-2018, taking the worldwide ATM count to 3.7 million by 2018. These growth projections indicate that financial institutions will expand their ATM base in the times ahead. This creates a huge opportunity for companies like NCR.

To add to the positives, the company reported better-than-expected second-quarter of fiscal 2016 results announced on Jul 26, 2016. Also, second-quarter revenues saw a year-over-year improvement. Moreover, the company raised its full-year 2016 revenue guidance and provided an encouraging third quarter revenue outlook.

NCR raised its full-year 2016 guidance. The company now expects revenues to be in a range of $6.325 billion–$6.400 billion (previously $6.25 billion–$6.35 billion). The Zacks Consensus Estimate is pegged at $6.382 billion. The company continues to expect non-GAAP earnings per share for full-year 2016 to range between $2.90 and $3.00. The Zacks Consensus Estimate is pegged at $2.95.

Coming to the third-quarter outlook, NCR expects revenues in the range of $1.62 billion to $1.64 billion. The Zacks Consensus Estimate stands at $1.630 billion. The company expects non-GAAP earnings per share for the third quarter to range between 77 cents and 82 cents. The Zacks Consensus Estimate is pegged at 81 cents.

Furthermore, continuous deal wins also drive growth. Moreover, NCR strengthened its position in the POS market through the integration of Radiant Systems.

However, softness in the ATM business in mature markets, competition from Diebold Incorporated (NYSE:DBD) and HP Inc. (NYSE:HPQ) , and a high debt burden remain concerns.

Estimate Revision

Following the second-quarter earnings release, analysts seem to be enthusiastic about NCR’s performance and its new product launches.

One estimate for 2016 and two estimates for 2017 moved upward over the last 60 days, taking the Zacks Consensus Estimate up by 1 cent and 5 cents to $2.95 and $3.18 per share, respectively. None of the estimates were revised downward over the same time frame.

NCR CORP-NEW Price and Consensus

NCR CORP-NEW Price and Consensus | NCR CORP-NEW Quote

Stock to Consider

A stock worth considering in the technology sector is Facebook (NASDAQ:FB), Inc. (FB), which sports a Zacks Rank #1 (Strong Buy).