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NCR Corporation NCR recently announced the acquisition of Freshop, a grocery e-commerce solution provider. Per the deal, Freshop’s e-commerce solution will be integrated with NCR’s retail core point-of-sale (POS) software platform. The financial details of the transaction remained undisclosed.
Rationale Behind the Acquisition
The addition of Freshop’s e-commerce solutions to NCR’s platform will enable faster deployment of buy-online, pickup-in-store capabilities for retailers, including regional and small grocery chains. The integration will help retailers enhance customers’ shopping experience and strengthen their brands. It will also facilitate margin expansion for these retailers compared to third-party e-commerce providers.
Moreover, Freshop’s e-commerce solution will become a key element of NCR’s Next-Generation Retail Store Architecture, including NCR Emerald. Notably, NCR Emerald simplifies store operations for retailers. The acquisition is further expected to boost its performance owing to the addition of new capabilities.
The company believes that the addition of Freshop will further enrich NCR’s product capabilities and service-led offerings, thereby aiding customer acquisition.
Solid Traction Among Retailers Bolsters Growth
NCR’s shares have gained 9.8% over the past year against the Zacks Computer - Integrated Systems industry’s decline of 9.4%.
This outperformance can be attributed to the strong adoption of NCR’s retail solutions, especially its cloud-based bundled POS software offerings and self-service technologies, among retailers.
Earlier, in December 2020, the company’s retail cloud-based POS platform, including the NCR Emerald solution, was selected by Big Y, a leading supermarket chain. The solution enables Big Y to integrate its grocery and convenience stores with a unified platform.
Further, NCR’s Advanced Store POS and Loyalty software was picked by Best Buy BBY Canada to enhance its in-store customer experience by providing flexible purchase options. Best Buy deploys NCR’s solution across all its 175 Canadian locations, which has boosted NCR’s market presence.
Moreover, the company benefits from increasing demand for self-checkout units by retailers in the wake of the coronavirus outbreak. Notably, the company has more than 1.5 million checkout lanes worldwide. Also, innovation like touchless self-checkout, which ensures health safety amid the pandemic, is a major positive.
Jumbo Supermarkten chose NCR to deliver self-checkout solutions for more than 680 retail stores in Holland and Belgium. This adds to the capabilities implemented by Jumbo that include NCR’s enterprise software platform, R10, and its mobile scanning solution, NCR FastLane Mobile Shopper.
Notably, NCR’s retail revenues grew 3% on a reported basis and 2% on a cc basis to $556 million in third-quarter 2020. Retail revenues were primarily driven by an increase in self-checkout revenues, which partially offset the lower POS revenues. Moreover, the company expects revenues of $2.1 billion from its retail business in 2020.
Zacks Rank & Stocks to Consider
NCR currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Teradata Corporation TDC and PerkinElmer PKI. Both stocks carry a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for PerkinElmer and Teradata is currently pegged at 19.5% and 16.1%, respectively.
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