On Apr 11, 2014, we issued an updated research report on
MICROS Systems Inc.
) 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.
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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
), Dell and
). 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,
) and NCR Corp., which provide mobile and tablet-based offerings
for the hospitality sector and cannibalize legacy POS
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).