What's in the Offing for NCR Corporation (NCR) in Q3 Earnings?

NCR Corporation NCR is set to report third-quarter 2022 results on Oct 25.

The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the same on one occasion, the average surprise being -5.1%.

In the last reported quarter, NCR delivered outstanding results, with strong revenue growth and increased profitability despite the challenging macroeconomic environment. The enterprise technology provider’s second-quarter non-GAAP earnings jumped 15% year over year to 71 cents per share and beat the Zacks Consensus Estimate of 61 cents. Revenues increased 19% year over year to $2 billion and beat the consensus mark of $1.96 billion.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $2 billion, suggesting a 5.4% increase from the year-ago period. The consensus mark for earnings stands at 78 cents per share, 13% higher than the year-ago quarter.

Let’s see how things have shaped up before this announcement.

NCR Corporation Price and EPS Surprise

NCR Corporation price-eps-surprise | NCR Corporation Quote

Factors to Consider

NCR’s third-quarter performance is likely to have benefited from the strong demand for its software and service solutions across the banking, retail and hospitality industries. The rapid adoption of digital banking solutions is driving its Banking segment revenues.

The company received positive feedback from customers on the new features and the functionality of its banking solutions. The Zacks Consensus Estimate for the Banking division’s revenues is currently pegged at $1.13 billion, suggesting year-over-year growth of more than 8%.

In light of the pandemic and efforts to lower costs, hospitality-related businesses and food, restaurant, convenience, drug and fuel retail chain operators globally have been seeking technology to automate their processes. This has been driving the demand for NCR’s store and work operation automation-related software and service solutions.

In the last reported quarter, revenues from the Retail segment were flat year over year, while the Hospitality division’s sales soared 11%. The positive growth trend is likely to have continued in the third quarter of 2022.

The Zacks Consensus Estimate for the Retail division’s revenues is currently pegged at $583 million, indicating year-over-year growth of 5.4%. The consensus mark for the Hospitality business unit suggests revenues to grow approximately 6.3% year over year and reach $237 million.

NCR’s acquisition of Cardtronics last year is anticipated to have driven the acceleration of the NCR-as-a-service strategy. Cardtronics’ robust debit network expanded NCR’s payments platform and helped it connect with retail and bank customers, thereby facilitating customer acquisition.

However, elevated component and freight costs are likely to have weighed on NCR’s third-quarter bottom line. Moreover, the company’s planned increase in research and development costs related to higher strategic investments and the inclusion of Cardtronics expenses are anticipated to have negatively impacted operating margins.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for NCR this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

NCR currently carries a Zacks Rank of #4 (Sell) and has an Earnings ESP of -6.25%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, Fortinet FTNT, Twilio TWLO and CDW Corporation CDW have the right combination of elements to post an earnings beat in their upcoming releases.

Fortinet is slated to report third-quarter 2022 results on Nov 2. The company carries a Zacks Rank #2 and has an Earnings ESP of +0.92% at present. Fortinet’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 10.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for quarterly earnings is pegged at 27 cents per share, suggesting a year-over-year improvement of 35%. FTNT’s quarterly revenues are estimated to increase 29.6% year over year to $1.12 billion.

Twilio currently carries a Zacks Rank #2 and has an Earnings ESP of +1.94%. The company is slated to report its third-quarter 2022 results on Nov 3. Twilio’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 64.1%.

The Zacks Consensus Estimate for Twilio’s third-quarter earnings stands at a loss of 39 cents per share. TWLO is estimated to report revenues of $969.2 million, which suggests growth of 30.9% from the year-ago quarter.

CDW carries a Zacks Rank #3 and has an Earnings ESP of +0.57%. The company is expected to report third-quarter 2022 results on Nov 2. CDW’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 6.8%.

The Zacks Consensus Estimate for CDW’s third-quarter earnings is pegged at $2.52 per share, indicating a year-over-year increase of 18.3%. The consensus mark for revenues stands at $6.22 billion, suggesting a year-over-year increase of 17.3%.

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