Is NCR stock a good shorting opportunity amid mixed FQ3 results?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 27, 2021
  • NCR Corp shares on Wednesday edged lower by 2.6% after announcing its most recent quarterly results.
  • The company reported its fiscal Q3 results, missing revenue estimates but outperforming EPS forecasts.
  • The stock trades at an exciting forward P/E ratio of 10.83.

On Wednesday, NCR Corp (NYSE:NCR) shares declined by 2.6% after reporting its fiscal third-quarter results. The company announced its most recent quarterly results before markets opened, beating earnings expectations, but missing the revenue forecast.

The company posted Q3 non-GAAP earnings per share of $0.69, beating the average for analyst expectations of $0.64. 

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However, its GAAP EPS of $0.06, failed to match the consensus Street forecast of $0.58, while revenue for the quarter increased by 19.5% from the same period a year ago to $1.9 billion, missing the average for analysts estimates of $2 billion. 

The company forecasts $4-$4.1 billion in revenue for the second half of the year and earnings per share of $1.30-$1.50.

Is NCR Corp undervalued?

From an investment perspective, NCR shares trade at an exciting forward P/E ratio of 10.83, making the stock a compelling option for value investors.

However, analysts expect its earnings per share to plummet by more than 108% this year before recovering by 50% next year.

Therefore, although the stock seems substantially undervalued following Wednesday’s pullback, its growth prospects could be putting some investors off, thus driving the stock price lower.

Source – TradingView

Technically, NCR shares seem to have recently plunged to complete a bearish breakout from an ascending channel. As a result, the stock is now pinned several levels below the 100-day moving average.

However, with shares yet to reach oversold conditions, the current downward movement could continue for the foreseeable future.

Therefore, investors could target extended declines at about $38.72, or lower at $36.79, while $42.72 and $44.58 are crucial resistance zones.

NCR seems poised for more declines

In summary, although NCR Corp shares have plunged recently, the stock is yet to reach oversold conditions, thus leaving room for more downward movements. 

Therefore, given the company’s disappointing FQ3 results, it may be best to monitor performances before betting on its compelling valuation multiples.

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