Diebold Incorporated (DBD), NCR Corporation (NCR): A Turnaround Play of This Global ATM Supplier

At $32.70 per share, NCR Corporation (NYSE:NCR) is worth around $5.4 billion on the market. The market values NCR at much higher valuation, at 14 times its trailing EBITDA. At the end of 2012, NCR Corporation (NYSE:NCR) has expanded its business footprint in software and the retail industry by acquiring Retalix Limited (NASDAQ:RTLX) for $650 million in cash. The acquisition would make NCR Corporation (NYSE:NCR) the leader in omni-channel retail solutions, improving the company’s revenue mix towards higher margin software and services segment. From the acquisition, NCR Corporation (NYSE:NCR) hopes to achieve around $5-$10 million in pre-tax cost synergies for the full year 2013 and around $20-$25 million in annual cost synergies in the next three years.

ACI Worldwide Inc (NASDAQ:ACIW) is the most expensive company among the three. It is trading at $45 per share, with the total market cap of nearly $1.8 billion. The market values ACI Worldwide Inc (NASDAQ:ACIW) at more than 16 times its trailing EBITDA. The company is the developer and installer of software products and services to facilitate electronic payments, operating in around 36 countries. ACI Worldwide Inc (NASDAQ:ACIW) has performed quite well, with more than 96% retention rates and more than 70% annual recurring revenues. Most of its revenue, 43% of the total revenue, was generated from retail payments, while bill pay/collections ranked second, accounting for 17% of the total revenue. For the full year 2013, ACI Worldwide Inc (NASDAQ:ACIW) expected to generate around $895-$915 million in revenue, with the operating income staying in the range of $170 million to $180 million. The full year 2013 EBITDA was estimated to be around $266 to $276 million.

My Foolish take

Diebold seems to be a good stock for investors to ride the company’s turnaround. With the lowest valuation, new leadership and the potential $100-$150 million cost savings, Diebold could boost its bottom line significantly by 2015, pushing up its share price. Senior portfolio manager Ann Milletti of Wells Capital Management thought that the company’s private market value could be around $44 per share, a 38% premium to its current price.

Anh HOANG has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article A Turnaround Play of This Global ATM Supplier originally appeared on Fool.com is written by Anh HOANG.

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