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Why NCR Corporation Stock Stumbled Today

By Steve Symington – Updated Oct 20, 2017 at 12:57PM

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The payment and banking solutions company's third quarter was held back by challenges in the ATM market.

What happened

Shares of NCR Corporation (NCR -2.06%) were down 11.3% as of 1:00 p.m. EDT Friday after the payment and banking solutions specialist announced mixed third-quarter 2017 results and reduced its full-year guidance.

More specifically, NCR's quarterly revenue fell 1% year over year to $1.66 billion, which translated to a 7% increase in adjusted earnings per diluted share to $0.93. By comparison, in July NCR told investors to expect revenue in the range of $1.66 billion to $1.70 billion and adjusted earnings per share of $0.88 to $0.93.

Looking forward, however, NCR also reduced its full-year outlook to call for revenue of $6.475 billion to $6.525 billion, down from $6.63 billion to $6.75 billion previously. On the bottom line, that should translate to full-year adjusted earnings per diluted share of $3.10 to $3.20, down from prior guidance of $3.32 to $3.42.

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So what

"Third quarter results were within the range of our Q3 guidance for revenue and earnings, but orders, particularly for ATMs, were disappointing, and the primary cause of our need to reduce our full year guidance," elaborated NCR chairman and CEO Bill Nuti. "ATM orders continue to be negatively impacted by large customer delays in spending in North America, weakness in India, the Middle East and Africa, and the upcoming Windows 10 conversion."

To be fair, Nuti insisted that headwinds in the ATM market should be short-term in nature. In the meantime, NCR enjoyed strong growth in annual contract values (ACV) thanks to customer acceptance of both its software-as-a-service (SaaS) solutions in digital banking and the company's hospitality cloud portfolio. Services margins also expanded thanks to higher revenue and ongoing productivity programs.

Now what

Nonetheless, however temporary these issues might prove, investors are rightly upset by NCR's full-year guidance reduction. Until ATM orders show signs of improvement, and assuming it sustains its positive momentum elsewhere at that time, I suspect NCR's stock price will remain under pressure.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends NCR. The Motley Fool has a disclosure policy.

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