Updated Aug 15 at 5:35pm ET.
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New data shows that retail sales dropped unexpectedly, a sign that consumers may be tightening their belts. While Brink's is shifting toward digital services, a large portion of its business still relies on managing physical cash for retailers and banks.
If shoppers spend less, there is less cash for Brink's to collect, process, and transport. While one month of weak data is not a reason to change our long-term view, it is worth watching whether this becomes a trend that eats into the company's growth in the second half of the year.
Brink's reported second-quarter earnings of $2.13 per share, which was about 4 percent higher than the $2.04 analysts expected. Revenue came in at $1.39 billion, exactly in line with targets. The core of the story remains the company's pivot away from just driving armored trucks toward managing digital retail payments and ATMs, which are more profitable services.
These high-margin segments grew in the mid-teens for the 14th quarter in a row. Management also noted that the plan to buy NCR Atleos, a major ATM operator, is moving faster than expected. This deal is a big part of our view on the stock, as it should significantly increase the company's scale and earnings power once it closes.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Analysts have consistently maintained their positive outlook on the company over several years. Six of nine analysts rate the stock a buy, and the average price target of $163 suggests a 43% increase from the current price.
Management has a very reliable habit of beating expectations, clearing the bar in six of the last eight quarters. This suggests they have a firm handle on their costs and growth.
| Expectation | |
|---|---|
| EPS | $2.42 |
| Revenue | $1.39B |
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