On May 20, 2013, shares of
Alliance Data Systems Corporation
) hit a 52-week high of $180.54. The momentum was driven by a
strong first quarter, which included a 4.9% positive surprise and
enhanced guidance for 2013.
Alliance Data reported first-quarter 2013 earnings on Apr 18.
Adjusted earnings of $2.55 per share comfortably surpassed the
Zacks Consensus Estimate of $2.43. Results augmented
approximately 7% year over year. Strong performances across all
segments aided the upside.
Alliance Data raised its revenue expectation to $4.25 billion
from $4.20 billion. The new guidance represents a 17% increase
from the 2012 level. Organic revenue growth is projected to be
around 7%. Core EPS was revised upward to $9.75 from $9.65. The
new guidance represents a 12% year-over-year improvement. The
Zacks Consensus Estimate of $9.39 per share lies within the
company guided range.
With respect to earnings trend, Alliance Data delivered positive
earnings surprise in all of the past 4 quarters, with an average
Moreover, Alliance Data continues to ink long-term deals.
Beginning May, the company signed an agreement to provide private
label credit card services for multichannel computer and
electronics retailer TigerDirect. In April, Alliance Data agreed
to provide private label credit card services to luxury retailer
Barneys New York. It also inked a multi-year agreement with The
Ohio University Foundation/Ohio University Alumni Association to
provide a co-brand credit card program for the alumni of Ohio
Additionally, valuation for Alliance Data looks attractive.
Though the shares are trading at a premium to the peer group
average both on a price-to-book basis and on a forward
price-to-earnings basis, return on equity is substantially higher
than the peer group average. Moreover, the 1-year return from the
stock was 48.1%, much above the S&P's return of 28.6%.
Alliance Data presently carries a Zacks Rank #3 (Hold). Financial
transaction service providers like
) - Zacks Rank #1 (Strong Buy),
Fidelity National Information Services, Inc.
) - Zacks Rank #2 (Buy) and
Official Payments Holdings, Inc
) - Zacks Rank #2 (Buy), appear impressive.
ALLIANCE DATA (ADS): Free Stock Analysis
FIDELITY NAT IN (FIS): Free Stock Analysis
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