MICROS Stays Neutral - Analyst Blog
April 25 2012 - 11:38AM
Zacks
We reiterate our Neutral recommendation on MICROS
Systems Inc. (MCRS). Even though a few important contract
wins dominated the overall performance of the company, its failure
to get rid of a few lingering downsides obstructed its exit from
the precarious zone.
The major highlights of the past quarter were the continued
winning and extension of projects. These included eminent patrons
such as Bertucci’s Italian Restaurant, Wynn
Resorts (WYNN), Ruby Tuesday (RT), etc.,
which averred their faith in the advanced solutions such as Table
Management System (TMS), Simphony Enterprise, etc. provided by
MICROS through the years.
Investors’ interests have been of utmost importance to
management under any condition. Currently, MICROS has a 2.2 million
share repurchase authorization that was announced in fiscal first
quarter 2012. With regard to this, the company bought back 500,000
shares for $46.05 per share during its second quarter, bringing the
total number of shares left to be acquired at 1.8 million.
As the company looks ahead, a few growth drivers keep management
prescient of a bolstered performance in 2012. Among these is the
software-as-a-service (SAAS) businesses which are looking favorable
at least for the time being. Moreover, the emerging economies,
especially from the Asia-Pacific region appear a haven for success
in the upcoming quarters.
Even with all these approbatory factors, the scenario does not
appear to be picture-perfect. Presence of competitors such as
NCR Corporation (NCR), Mentor Graphics
Corp. (MENT) and FARO Technologies Inc.
(FARO) pose major causes of concern for MICROS to retain its
position in the industry.
One factor to which we can ascribe the ongoing pervasive
detrimental effects on MICROS’ performance is the latest recession.
Customer expenditures have been badly hit and even though recovery
is on the way, the shaky European market continues to abate
revenues for the company as it traverses through 2012.
We had observed that the company had incurred nearly 51% of its
sales from international operations in its fiscal year 2011.
Furthermore, in its second quarter of fiscal 2012, MICROS’
international revenues accounted for about 57% of its gross sales.
This over-dependence on offshore markets can have adverse effects
on its own performance accruing from exchange rate instability.
We believe that MICROS needs to take a few more aggressive
stances to grapple with its downsides, thus allowing us to aver a
more affirmative rating on the long-term performance of its stock.
In the short run, we have a Zacks #3 Rank on the stock which
translates into a short-term Hold rating.
FARO TECH INC (FARO): Free Stock Analysis Report
MICROS SYS (MCRS): Free Stock Analysis Report
MENTOR GRAPHICS (MENT): Free Stock Analysis Report
NCR CORP-NEW (NCR): Free Stock Analysis Report
RUBY TUESDAY (RT): Free Stock Analysis Report
WYNN RESRTS LTD (WYNN): Free Stock Analysis Report
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