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NCR Corp (NCR) Likely to Post a Surprise in Q1 Earnings

Zacks Equity Research

We expect NCR Corporation NCR to beat expectations when it reports fiscal first-quarter 2017 results on Apr 20. In the last quarter, the company reported a positive earnings surprise of 3.88%. Also, it has an average positive earnings surprise of 9.3% for the last four quarters.

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

Why a Likely Positive Surprise?

NCR is likely to beat on earnings because it has the right combination of the two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate (48 cents) and the Zacks Consensus Estimate (46 cents), is +4.35%. This is a leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Note that stocks with a Zacks Rank #1, 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings estimates. The Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement. 

The combination of NCR’s favorable Zacks Rank and positive ESP makes us confident in looking for an earnings beat.

What is Driving the Better-Than-Expected Earnings?

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

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.

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

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

Overall, we expect an earnings beat from NCR this time around.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Applied Materials, Inc. AMAT with an Earnings ESP of +1.32% and a Zacks Rank #1.

TE Connectivity Ltd. TEL with an Earnings ESP of +0.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Seagate Technology PLC STX with an Earnings ESP of +3.77% and a Zacks Rank #2.

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