In a concerted effort to return more value to shareholders,
the board of directors of
Alliance Data Systems Corporation
) approved a new share buyback program. The company, with the new
approval, is now authorized to repurchase shares worth $400
million in 2013.
ALLIANCE DATA (ADS): Free Stock Analysis
DISCOVER FIN SV (DFS): Free Stock Analysis
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It is likely that the announcement of a new share buyback program
helped the share price move up 0.5%. The share price of Alliance
Data closed at $155.21 as on Tuesday.
The company has consistently bought back shares. In the first
nine months of 2012, it spent $65.4 million to repurchase 0.5
million shares. Alliance Data was left with $334.6 million under
its authorization as of September 30, 2012.
On December 31, 2011, the board authorized to repurchase shares
worth $400 million through 2012. The new approval replaces the
current authorization, which expired on December 31, 2012. The
company's strong financial position provides sufficient support
to its buyback program.
Following the new approval, the company's share repurchase
authorization has increased to nearly $2.8 billion since the
first quarter of 2008. However, only $2 billion has been
exhausted to buyback 36.3 million shares till now.
Over the last 30 days, there was earnings momentum. We believe
that the company's effort to return more value to shareholders
might encourage analysts to raise their estimates providing an
upside to its Zacks Rank.
Alliance Data is scheduled to release its fourth-quarter and full
year 2012 earnings results on January 31, after the closing bell.
The Zacks Consensus Estimates for the fourth quarter and 2012 are
currently pegged at $1.67 and $8.16 per share, respectively, up
nearly 5% and 13% for the respective periods. However, the Zacks
Consensus Estimate for 2012 is below the company's guidance of
$8.50 per share.
Alliance Data has outperformed the Zacks Consensus Estimate and
the company's guidance in each of the first three quarters of
2012. We expect the trend to continue based on its year-to-date
performance, strategic acquisitions, expansion of the Dotz
Program and the signing of long-term agreements.
Alliance Data carries a Zacks Rank #2 (Buy). Peer
Discover Financial Services
) carries a Zacks Rank #3 (Hold).