Updated Research Report on MICROS - Analyst Blog
April 15 2014 - 1:00PM
Zacks
On Apr 11, 2014, we issued an
updated research report on MICROS Systems Inc.
(MCRS) following the company’s mixed second-quarter fiscal 2014
results. Although earnings per share missed the Zacks Consensus
Estimate, the company’s revenues surpassed the consensus mark.
Notably, revenues also improved on a year-over-year basis. The
improving macro condition for all its business segments, especially
software and strong sales implementation were responsible for the
6.5% increase in revenues. Also, the year-over-year expansion was
driven by strong growth in terms of both geography and
verticals.
Moreover, the company’s newly introduced product ranges and
best-in-class services are likely to cater to increasing demand in
the industry and boost revenue streams, going forward. MICROS also
launched mTablet, which generated widespread interest in its
devices from different domains.
To cater to this demand, MICROS will launch two low-priced tablets
in collaboration with Microsoft (MSFT), Dell and
Hewlett-Packard (HPQ). We believe that the recent
collaboration will help the company to increase its revenues from
hardware business and to cross sell its products across verticals,
particularly in retail.
Furthermore, MICROS has expanded its product suites and
geographical reach with acquisitions over time. The acquisition of
Torex Retail Holdings, Ltd., a supplier of software solutions to
the retail segment, has helped the company to extend its presence
in Europe. The company also acquired Fortech Italia, TIG Global and
Fry Inc. We believe that these acquisitions will add value to
MICROS’ existing portfolio and will give the company a major
competitive edge and strengthen its market position.
Also, MICROS’ strategic steps to increase shareholder value through
share repurchases are also encouraging. During the first six months
of fiscal 2014, the company spent around $111.3 million on share
repurchases. MICROS has approximately $95.9 million available for
purchase per the Apr 2013 authorization agreement. These continued
share buyback plan is expected to support the company’s bottom line
going forward.
On the flip side, the company is facing competition from the likes
of Square, Revel, Groupon Inc. (GRPN) and NCR
Corp., which provide mobile and tablet-based offerings for the
hospitality sector and cannibalize legacy POS workstations.
Hence, MICROS being a hardware-based POS solutions provider will
lose out on market share. Moreover, the company’s European exposure
and a sluggish macro-economic environment are the other headwinds,
going forward.
Currently, MICROS has a Zacks Rank #2 (Buy).
GROUPON INC (GRPN): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
MICROS SYS (MCRS): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis Report
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