NCR Corporation (NYSE:NCR): Has Recent Earnings Growth Beaten Long-Term Trend?

After reading NCR Corporation’s (NYSE:NCR) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for NCR

How NCR fared against its long-term earnings performance and its industry

I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to assess various companies on a more comparable basis, using new information. NCR’s most recent twelve-month earnings is $230.0M, which, against last year’s level, has risen by a fairly muted 3.60%. Given that these values are somewhat myopic, I’ve estimated an annualized five-year value for NCR’s net income, which stands at $204.8M. This suggests that, generally, NCR has been able to consistently raise its bottom line over the last couple of years as well.

How has it been able to do this? Well, let’s take a look at whether it is merely due to an industry uplift, or if NCR has experienced some company-specific growth. Over the last couple of years, NCR top-line expansion has outpaced earnings and the growth rate of expenses. Though this resulted in a margin contraction, it has cushioned NCR’s earnings contraction. Inspecting growth from a sector-level, the US tech industry has been growing its average earnings by double-digit 14.10% in the previous year, and a more muted 6.51% over the past five years. This shows that any tailwind the industry is profiting from, NCR has not been able to reap as much as its industry peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as NCR gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research NCR to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for NCR’s future growth? Take a look at our free research report of analyst consensus for NCR’s outlook.

2. Financial Health: Is NCR’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.