The Zacks Analyst Blog Highlights: NCR, Vantiv, Microsoft, Diebold and Krispy Kreme Doughnut

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Oct 09, 2012, 09:30 ET

CHICAGO, Oct. 9, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include NCR Corp. (NYSE:NCR), Vantiv Inc. (NYSE:VNTV), Microsoft Corp. (Nasdaq:MSFT), Diebold Inc. (NYSE:DBD) and Krispy Kreme Doughnut Inc. (NYSE:KKD).

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Here are highlights from Monday's Analyst Blog:

NCR, Vantiv in ATM Deal

NCR Corp. (NYSE:NCR) announced that payment processing company Vantiv Inc. (NYSE:VNTV) will be using its APTRA Edge software. Financial details of the deal were not divulged.

Ohio-based Vantiv has been in the business of payment processing for over 41 years. The company serves merchants (retail, restaurant, healthcare, supermarket, drug store) and financial institutions across the U.S. and processes more than 12.9 billion payment transactions and approximately $426 billion in volume annually. Currently, Vantiv supports more than 400,000 merchant locations and more than 12,000 automated teller machines (ATMs) in 46 states and 8 countries.

Vantiv, which has been using NCR's APTRA Edge software for years, will now use it to support ATMs, which use multivendor software. The reason behind this is that APTRA Edge offers utmost flexibility regardless of the ATM manufacturer or switching provider. APTRA provides an open solution based on Microsoft Corp.'s (Nasdaq:MSFT) Windows, enabling the financial institution to simultaneously offer self-service applications from different hosts and deliver these across hardware from multiple vendors.

Multivendor software enhances the efficiency of an ATM network and allows a financial institution to leverage its network for a competitive advantage. Multivendor software reduces costs, increases network efficiency and security at an ATM and thereby reduces supervision as well as maintenance costs. The benefits of such software are prompting financial institutions to move to a flexible multivendor environment.

With APTRA, Vantiv will be able to connect itself to non-NCR ATMs and grow its exposure in the financial services sector. This would also create an opportunity for NCR software solutions, which could attract more companies like Vantiv.

We remain highly positive about NCR's broad exposure in the ATM space. According to a study published by Retail Banking Research, NCR has been the world's largest supplier of multi-vendor ATM middleware and applications for 25 consecutive years, amid stiff competition from Diebold Inc. (NYSE:DBD) and Wincor Nixdorf.

Currently, NCR has a Zacks #4 Rank (short-term Hold rating), reflecting the impact of the charge under the Foreign Corrupt Practices Act.

Krispy Kreme Forays into Singapore

In order to ramp up its overseas presence, Krispy Kreme Doughnut Inc. (NYSE:KKD) recently forged a deal with Star360 Group to set up 15 Krispy Kreme franchise locations in Singapore over the next five years. The financial terms of the deal were not disclosed.

Star360 group boasts superior local market knowledge and has a proven track record of venturing into the premium retail industry within the Southeast Asian market. The group operates retail outlets in Singapore, Malaysia, Indonesia, Hong Kong, Philippines, Thailand, Taiwan and Japan.

Possessing strong know-how of local food habits, the franchisee is hopeful that its collaboration with a global brand like Krispy Kreme would help spread its Glazed doughnuts and freshly brewed coffee successfully across Singapore. According to Star360 group, coffee and doughnuts is a flourishing category in Singapore and the population has a sweet tooth.

The latest deal affirms Winston-Salem, North Carolina based Krispy Kreme's plan to make Singapore one the prime markets for international expansion, considering its emergent economy. According to a global market research company, Euromonitor, Singapore recorded gross domestic product (GDP) growth of 5% in 2011 on the top of a robust GDP growth of 14% in 2010, leading to higher consumer confidence.

Increasing disposable income has enabled Singaporeans to spend big on branded food items. It is being witnessed that the young population as well as the emigrant population in Singapore are more inclined towards western fast-food chains. We believe that Krispy Kreme seeks to fully capitalize on this trend.

According to Krispy management, the company's overseas expansion is expected to be more in 2013 than in 2012. Encouraged by international growth over the last six years, the company anticipates having 900 overseas stores within 2017.

Furthermore, a sluggish macroeconomic environment acts as another short-term deterrent. According to the Monetary Authority of Singapore, GDP growth is expected to be slow to 1–3% in 2012.

However, the market is not free from competition. Apart from some western players currently serving the market, steep competition will likely come from some of the domestic brands — The Donut Factory and Mad Over Donuts.

Krispy Kreme currently carries a Zacks #1 Rank, which translates into a short-term 'Strong Buy' rating. We maintain our long-term "Outperform" recommendation on the stock.

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