Sales of self-service checkout systems are likely to increase NCR Corp.'s earnings this year, according to a research note published Wednesday.
An example of this growth is a deal the Dayton, Ohio, automated teller machine maker has to provide equipment to Tesco PLC. The British retailing company is planning to enter the United States with a supermarket chain that will be called Fresh and Easy, Gil B. Luria, an analyst at Wedbush Morgan Securities, wrote in a note to investors.
According to its five-year plan, the U.K. retailer plans to open 50 stores in this country by February and 200 in 2008, Mr. Luria wrote. He estimated that the Tesco deal alone could add a penny to NCR's earnings per share this year.
Fresh and Easy has said that it expects sales of $20 per square foot per week, compared with the supermarket average of $9, driven by prices that will be 10% to 25% lower than competitors and by using automated checkout systems and hiring fewer employees, Mr. Luria wrote. "We see this as an example of the momentum being gained for self-service."
He reiterated his "buy" rating on NCR's stock.
"We believe NCR's self-service retail business is becoming an increasingly important contributor to growth, and should help NCR achieve above trend earnings growth over the next two to three years," Mr. Luria wrote.
NCR shares were trading at $24.75 Wednesday morning, down 1.39% from Monday's closing price.
