Wall Street - NCR Script All time High

The Dayton-based technology company's stock price has shot up about one-third in the past three months, and Dec. 1, NCR announced it was going to split its stock in half in January.

So far this year, the stock price is up 60 percent and continues to set not just 52-week highs, but all-time highs. With recent trading ranges around $60, it's getting harder to remember when the stock stood at less than $18 in early 2003.

"I think the market is starting to realize there's a lot of earnings potential that the company has yet to unlock," said Matt Summerville, an analyst with KeyBanc Capital Markets in Cleveland.

Analysts said Mark Hurd, who became chief executive officer in early 2003, has become popular with investors after delivering seven straight quarters of estimates-beating numbers and is now showing the company's sales might be on the road to recovery.

Since taking over, Hurd has exploded profitability by shedding costs through employee layoffs, selling buildings and several other initiatives that have shed tens of millions of dollars in costs from the company. In recent quarters, he has been able to manage sales growth after years of flat or falling revenue at the company that provides data-warehousing services through its Teradata division and also sells automated teller machines and retail scanners.

In the third quarter, the company tripled its profit, beating estimates of 40 cents per share by 6 cents. The company also said revenue increased 7 percent, which showed that sales are turning the corner.

The consensus estimate of analysts is for NCR to earn $2.28 per share in 2005 compared with an expected $1.52 per share for 2004. They also expect sales to rise to $6.14 billion in 2005 from an expected $5.87 billion in 2004. Sales were $5.6 billion in 2003.

Summerville said sales could improve as NCR continues to exit old businesses that were left over from 1990s-era contracts in its customer services division. These included service contracts for equipment made by other equipment providers. These kinds of growth numbers are grabbing attention on Wall Street, as the stock performance indicates. But NCR also is trying to sell itself a little better as well.

NCR was scheduled to meet Dec. 2 with analysts in New York to tell its story to the people who can move the stock price even higher. Summerville pointed out this is the first such meeting for NCR in more than three years, but it might not have been the best idea until now, after the company had addressed many of its problems.

Merrill Lynch analysts Richard Farmer and Steve Milunovich said in a research note written in late October, when the price was at about $54, that the stock price could shoot to $65 per share.

"We continue to believe the Street underestimates NCR's earnings leverage on even modest growth in Teradata and ATMs, both of which delivered double-digit sales growth," the analysts said in the note.