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Alliance Data (ADS): Is it Poised to Beat on Q3 Earnings?

We expect Alliance Data Systems CorporationADS to beat expectations when it reports third-quarter results on Oct 22, before the market opens.

Why a Likely Positive Surprise?

Our proven model shows that Alliance Data has the right combination of two key ingredients.

Zacks ESP : Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.36%. This is because the Most Accurate estimate of $3.73 is higher than the Zacks Consensus Estimate of $3.68. The positive ESP is a meaningful indicator of a likely positive earnings surprise for the company.

Zacks Rank : Alliance Data carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1, 2 or 3 have a significantly higher chance of beating earnings.

The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

What is Driving the Better-Than-Expected Earnings?

Alliance Data is poised to deliver another quarter of solid results on strong segmental performance. Strategic acquisitions made over the past will also aid the upside.

Revenues should get a boost as the company focuses on providing private label credit card services to clients.

The bottom line is likely to get an additional boost from the lower share count attributable to continued share repurchase.

Management expects Alliance Data to generate revenues of about $1.52 billion in the third quarter, translating into a year-over-year increase of 15%. Core earnings per share are expected at $3.90, up 12% year over year.

Management expects AIR MILES to increase as sponsors expedite promotional activity alongside new initiatives available within AIR MILES Cash.

Alliance Data delivered earnings surprises in the last four quarters, with an average beat of 3.75%.

Other Stocks to Consider

Here are some other companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

Visa Inc. V , Earnings ESP of +16.13% and a Zacks Rank #1. The company is scheduled to report its third-quarter earnings on Nov 4.

Fiserv, Inc. FISV , Earnings ESP of +3.09% and a Zacks Rank #2 (Buy). The company is slated to report its third-quarter earnings on Oct 27.

AXIS Capital Holdings Limited AXS , Earnings ESP of +1.18% and a Zacks Rank #2. The company is expected to report its third-quarter earnings on Oct 27.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

VISA INC-A (V): Free Stock Analysis Report

FISERV INC (FISV): Free Stock Analysis Report

ALLIANCE DATA (ADS): Free Stock Analysis Report

AXIS CAP HLDGS (AXS): Free Stock Analysis Report

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


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

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