New Share Buyback at Alliance Data - Analyst Blog


Share price of Alliance Data Systems Corporation ( ADS ) has been on an uptrend following the approval of a new share buyback program worth $400 million by the company's board of directors.

The current share repurchase program replaces the earlier one that expired at the end of 2013. In the first nine months of the year, Alliance Data had repurchased about 1.4 million shares for $231.1 million.

The previous buyback program was approved on Jan 2, 2013, whereby the company was authorized to repurchase shares worth $400 million.

Alliance Data's continued share repurchase activity reflects its strong financial position, which in turn, is sustained by solid operational performance at the company.

Share repurchases benefit a company's earnings per share, book value as well as shareholder equity, as buyback activities lower share count. Meanwhile, Alliance Data continues to concentrate on enhancing its core line business growth and operating income. The company delivered positive earnings surprises in two of its last four quarters with an average beat of 0.8%.

However, no earnings momentum has been witnessed over the last 7 days. As a result, the Zacks Consensus Estimate for 2013 and 2014 remains flat at $9.40 per share and $11.86 per share, respectively. Nevertheless, we expect that the announcement of the recent buyback authorization will encourage analysts to pull up their estimates going forward.

Alliance Data presently has a Zacks Rank #2 (Buy). Other top-ranked stocks worth considering in the Financial Transaction Services industry are Fidelity National Financial Services, Inc. ( FIS ), Qiwi plc ( QIWI ) and Fiserv, Inc. ( FISV ). All these stocks carry a Zacks Rank #1 (Strong Buy).

ALLIANCE DATA (ADS): Free Stock Analysis Report

FIDELITY NAT IN (FIS): Free Stock Analysis Report

FISERV INC (FISV): Free Stock Analysis Report

QIWI PLC-ADR (QIWI): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ADS , FIS , FISV , QIWI

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