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If you prefer to avoid danger, too, then we hope you enjoy this free stock pick from our Most Dangerous Stocks Model Portfolio.
This free stock feature provides a concise summary of how we pick stocks for this Model Portfolio. It is not a full Danger Zone report, but it gives you insight into the rigor of our research and approach to picking stocks. Whether you’re a subscriber or not, we think it is important that you’re able to see our research on stocks on a regular basis.
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Keep an eye out for the free pick from our Most Attractive Stocks Model Portfolio, which will be published this week as well! The work that goes into that report is just as valuable.
We update this Model Portfolio monthly. The latest Most Attractive and Most Dangerous stocks Model Portfolios were updated and published for clients on April 3, 2025.
Free Most Dangerous Stock Pick: NCR Voyix Corp (VYX)
NCR Voyix’s (VYX: $8/share) net operating profit after tax (NOPAT) margin fell from 8% in 2019 to -45% in 2024, while the company’s invested capital turns fell from 1.0 to 0.6 over the same time. Falling NOPAT margins and invested capital turns drive NCR Voyix’s return on invested capital (ROIC) from 8% in 2019 to -26% in 2024.
NCR Voyix’s economic earnings, the true cash flows of the business, fell from $113 million in 2019 to -$1.7 billion in 2024. Meanwhile, the company’s GAAP net income rose from $454 million to $943 million over the same time. Whenever GAAP earnings rise while economic earnings decline, investors should beware.
Figure 1: NCR Voyix’s Economic vs GAAP Earnings Since 2019
Sources: New Constructs, LLC and company filings
VYX Provides Poor Risk/Reward
Despite its poor and declining fundamentals, NCR Voyix’s stock is priced for significant profit growth, and we believe the stock is overvalued.
To justify its current price of $8/share, NCR Voyix must improve its NOPAT margin to 6% (compared to -45% in 2024) and grow revenue by 4% (compared to revenue falling 16% compounded annually over the last five years) compounded annually through 2034. In this scenario, NCR Voyix’s NOPAT would grow from -$1.3 billion in 2024 to $251 million in 2034. Contact us for the math behind this reverse DCF scenario. We think these expectations are overly optimistic, especially considering the company’s NOPAT fell year-over-year (YoY) in four of the last five years.
Even if NCR Voyix improves its NOPAT margin to 5% and grows revenue 3% compounded annually through 2034, the stock would be worth no more than $3/share today – a 63% downside to the current stock price. Contact us for the math behind this reverse DCF scenario.
Each of these scenarios also assumes NCR Voyix can grow revenue, NOPAT, and FCF without increasing working capital or fixed assets. This assumption is unlikely but allows us to create best case scenarios that demonstrate the high expectations embedded in the current valuation.
Critical Details Found in Financial Filings by Our Robo-Analyst Technology
Below are specifics on the adjustments we made based on Robo-Analyst findings in NCR Voyix’s 10-K:
Income Statement: we made under $2 billion in adjustments, with a net effect of removing just over $650 million in non-operating income. Professional members can see all adjustments made to NCR Voyix’s income statement on the GAAP Reconciliation tab on the Ratings page on our website.
Balance Sheet: we made over $2 billion in adjustments to calculate invested capital with a net increase of just under $2 billion. One of the most notable adjustments was for asset write downs. Professional members can see all adjustments made to NCR Voyix’s balance sheet on the GAAP Reconciliation tab on the Ratings page on our website.
Valuation: we made just under $2 billion in adjustments to shareholder value, with a net decrease of just under $2 billion. The most notable adjustment to shareholder value was for total debt. Professional members can see all adjustments to NCR Voyix’s valuation on the GAAP Reconciliation tab on the Ratings page on our website.
This article was originally published on April 11, 2025.
Disclosure: David Trainer, Kyle Guske II, and Hakan Salt receive no compensation to write about any specific stock, style, or theme.
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