NCR Stock Falls as Carlyle, Blackstone Bid Reportedly Too Low

NEW YORK (TheStreet) -- NCR (NCR) shares are down 2.51% to $33.86 on Wednesday following reports that Blackstone Group (BX) and Carlyle Group (CG) are considering a combined buyout bid of the business to consumer inter-connectivity software and hardware service provider, according to Bloomberg.

The deal has not gone through because of a disagreement on the purchase price. NCR wants a bid of at least $36 per share, according to Bloomberg sources.

The leveraged buyout, valued at about $10 billion, would be a rare collaboration between Blackstone and Carlyle, the world's two biggest private equity firms, and would be the largest LBO since the 2008 financial crisis.

TheStreet Ratings team rates NCR CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate NCR CORP (NCR) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its generally strong cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly increased by 400.00% to $75.00 million when compared to the same quarter last year. In addition, NCR CORP has also vastly surpassed the industry average cash flow growth rate of 48.86%.
  • NCR CORP's earnings per share declined by 25.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, NCR CORP reported lower earnings of $1.06 versus $2.67 in the prior year. This year, the market expects an improvement in earnings ($2.65 versus $1.06).
  • The revenue fell significantly faster than the industry average of 33.3%. Since the same quarter one year prior, revenues slightly dropped by 2.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Currently the debt-to-equity ratio of 1.91 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, NCR maintains a poor quick ratio of 0.93, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Computers & Peripherals industry and the overall market, NCR CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • You can view the full analysis from the report here: NCR Ratings Report

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