We came across a bullish thesis on NCR Atleos Corporation (NATL) on Substack by Alex Feng. In this article, we will summarize the bulls’ thesis on NATL. NCR Atleos Corporation (NATL)’s share was trading at $27.04 as of April 1st. NATL’s trailing and forward P/E were 21.98 and 6.51 respectively according to Yahoo Finance.
A person using a bank ATM to access current and savings accounts.
NCR Atleos (NATL) is one of the dominant players in the global ATM manufacturing industry, uniquely positioned to capitalize on the banking sector’s shift toward outsourced ATM operations. While the overall ATM market is experiencing a modest decline, Atleos is driving growth through its ATM-as-a-Service (ATMaaS) model, which enables banks to outsource their ATM networks, significantly reducing costs and operational complexity. This transition is accelerating as banks seek cost efficiencies, allowing Atleos to expand its recurring revenue base and improve profit margins. With the acquisition of Cardtronics, Atleos further strengthened its ATMaaS offering by integrating the largest independent ATM deployer (IAD) network, comprising 78,000 ATMs across North America and Europe. This move enhances its scale advantages, enabling cost efficiencies that banks cannot achieve independently.
The ATMaaS model is fundamentally transforming Atleos’ business, shifting its revenue structure from one-time machine sales to a subscription-based model that covers maintenance, software, security operations, cash management, and transaction processing. This transition increases total revenue per ATM by 2.0–2.5x over its lifecycle while delivering higher EBITDA margins of 30%, compared to the 20–25% margins under the traditional model. Atleos currently has 28,400 ATMs under its ATMaaS model, with an average revenue per unit (ARPU) of $8,600, and management aims to expand this to 125,000 ATMs over the next three to five years, increasing ARPU to over $10,000. As a result, Atleos expects a 6% revenue CAGR and mid-teens EBITDA growth through 2027, with free cash flow projected to triple over this period.
Despite these favorable industry trends and Atleos’ strong execution, the stock remains undervalued at 6.2x EV/EBITDA and 9.5x adjusted PE, reflecting market skepticism about its growth prospects. However, as the company continues expanding ATMaaS adoption, deleveraging its balance sheet, and returning capital to shareholders, a moderate valuation rerating could generate a 25–43% IRR over the next three years. If the company fully executes its strategic initiatives, the upside could be even higher, making it an attractive investment with limited downside risk. Furthermore, Atleos benefits from banks’ increasing focus on cost reduction amid economic uncertainty, positioning it as a defensive investment within a diversified portfolio.