ADS  Alliance Data Systems Corporat...

Exchange

NYSE

Sector

Miscellaneous

Industry

Business Services

Market Cap.

12.92B

Vuru Grade

72.66/100

Current Price

$232.80
+4.42 (+1.94%)

Growth Price

$429.46
Undervalued by 84.48%

Stability Price

$170.42
Overvalued by 26.80%

Company Metrics

  • P/E 26.55
  • P/S 1.71
  • P/B 8.9
  • EPS 8.77
  • Cash ROIC 32.16%
  • Cash Ratio -
  • Dividend 2.08 / 0.96%
  • Avg. Vol. 595,125.00
  • Shares 55.50M
  • Market Cap. 12.92B

Company Description

Alliance Data Systems Corporation, together with its subsidiaries, provides data-driven and transaction-based marketing, and customer loyalty solutions primarily in the United States and Canada. The company operates in three segments: LoyaltyOne, Epsilon, and Private Label Services and Credit. The LoyaltyOne segment includes AIR MILES Reward Program that enables consumers to earn AIR MILES reward ... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Alliance Data Systems Corporation (ADS) Moves Higher on Volume Spike for ...
Equities.com - 22 hours ago
Alliance Data Systems Corporation (ADS) traded on unusually high volume on Oct. 19, as the stock gained 1.94% to close at $232.80.
Alliance Data Systems (ADS) Shares Cross Above 200 DMA
Nasdaq - Oct 19, 2017
In trading on Friday, shares of Alliance Data Systems Corp. (Symbol: ADS) crossed above their 200 day moving average of $238.67, changing hands as high as $242.99 per share.
Alliance Data Systems Corporation (ADS) Insider MOTES JOSEPH L III sold 150 ... - Economic News
Alliance Data Declares Dividend on Common Stock - PR Newswire (press release)
Alliance Data's (ADS) Earnings Top Q3 Estimates, Keeps View
Nasdaq - Oct 19, 2017
Alliance Data Systems CorporationADS is a premier private label credit card processing firm for mid-market specialty retail stores in the United States.
Alliance Data's (ADS) Q3 Earnings Top, Rise Y/Y, View Intact - Zacks.com
Alliance Data Systems (ADS) Provides Sept. Update on Card Services Performance
StreetInsider.com - Oct 13, 2017
... metrics for the overall total managed portfolio. The Master Trust data represents a subset of the Company's total managed portfolio, and the Company believes the information presented below provides a more complete view of the Card Services segment.
Alliance Data Systems Corporation (ADS) Moves Higher on Volume Spike for ... - Equities.com
Clinton Group Inc. Reduces Stake in Alliance Data Systems Corporation (ADS) - The Ledger Gazette
Alliance Data Systems Corporation (ADS) Rises 2.56% for September 21
Equities.com - Sep 21, 2017
Among the biggest risers on the S&P 500 on Thursday September 21 was Alliance Data Systems Corporation ($ADS), popping some 2.56% to a price of $215.81 a share with some 522,636 shares trading hands.
Alliance Data Schedules Third-Quarter 2017 Earnings Conference Call For ... - PR Newswire (press release)
PRA Group, Inc. (PRAA) vs. Alliance Data Systems Corporation (ADS)?: Which ... - Economic News
Alliance Data Systems up nearly 6% as charge-offs fall
Seeking Alpha - Oct 13, 2017
In its September update, the company reported net charge-offs as a percent of receivables dipping to 4.1% vs 6.4% a month earlier.
Alliance Data Systems Corporation (ADS) Moves Lower on Volume Spike for ...
Equities.com - Sep 20, 2017
Alliance Data Systems Corporation (ADS) traded on unusually high volume on Sep. 20, as the stock lost 2.15% to close at $210.43.
Alliance Data Systems Corporation (ADS) Analysts See $4.80 EPS - WeeklyHub
Alliance Data Systems Corporation (NYSE:ADS) Position Raised by Andra AP fonden - TrueBlueTribune
Buy services stock analysis: Alliance Data Systems Corporation (ADS)
Street Observer (press release) - 3 hours ago
Alliance Data Systems Corporation (ADS) stock price traded with surging change along with the volume 1.32 million shares on Thursday trading session.
Alliance Data Top-Five Client Bank of Montreal Renews With LoyaltyOne®
PR Newswire (press release) - Oct 16, 2017
PLANO, Texas, Oct. 16, 2017 /PRNewswire/ -- Alliance Data Systems Corporation (NYSE: ADS), a leading provider of loyalty and marketing solutions, announced today that its LoyaltyOne┬« Canadian loyalty business has signed a multi-year renewal ...
Diversified Royalty Corp. Announces Renewal of AIR MILES® Contract by BMO - Marketwired (press release)
An Eye on Data: Alliance Data Systems Corporation (NYSE: ADS)
Alpha Beta Stock - 23 hours ago
Alliance Data Systems Corporation (NYSE: ADS) has grabbed attention from the analysts when it experienced a change of 1.28% in the current trading session to trade at $231.31.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for ADS to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate ADS's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$232.80 Current Price

$429.46 Growth Price (DCF)

Undervalued by 84.48%


Growth Rate Assumed by Market: -1.87%


Future Free Cash Flow Growth Rate: 15.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$170.42 Stability Price (EPV)

Overvalued by 26.80%


Discount Rate: 15.0%

$- NCA Price

Overvalued by 100.00%

$1,050.23 Book Price

Undervalued by 351.13%


Varying Cash Return on Invested Capital over the past 5 years

ADS has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. However, there is a substantial variation in their Cash ROIC from year-to-year. This company may have unreliable free cash flow or operates in a business where invested capital costs increase substantially on a sporadic basis. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

ADS has created $32.16 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 1.02B 868.12M 1.19B 1.51B 1.88B
divided by
Invested Capital 6.07B 7.76B 12.88B 14.85B 1.66B
Cash ROIC 16.76% 11.18% 9.20% 10.20% 113.46%

Excellent Return on Equity over the past 5 years

Over the past 5 years, ADS has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

ADS has generated $37.91 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 422.26M 496.17M 516.14M 605.43M -
divided by
Stockholders' Equity 528.49M 855.76M 2.40B 2.01B 1.66B
Return on Equity 79.90% 57.98% 21.54% 30.12% -

Excellent Business Performance over the past 10 years

ADS has been able to maintain profitability in good times and bad. This could mean ADS has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

ADS has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 454.87M 401.46M 305.44M 833.95M 937.85M 1.02B 868.12M 1.19B 1.51B 1.88B

Very Weak Balance Sheet

ADS is in a poor financial position. This could be due to a slowdown in sales, indulging in debt-fuelled growth, or the nature of ADS's business. If it is highly capital intensive (see Economic Moat), they likely have to outlay significant capital just to stay competitive. This habit often destroys more value than it creates.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 265.84M 156.91M 213.38M 139.11M 216.21M 893.35M 969.82M 1.08B 1.17B -
Current Assets 1.45B 1.94B 2.36B 6.13B 6.61B 9.13B 10.40B 13.81B 16.25B -
Total Assets 4.10B 4.36B 5.23B 8.27B 8.98B 12.00B 13.24B 20.26B 22.42B -
Current Liabilities 1.33B 1.95B 2.13B 3.86B 3.86B 5.03B 4.51B 6.31B 6.41B -
Total Liabilities 2.91B 3.96B 4.95B 8.25B 8.80B 11.47B 12.39B 17.87B 20.41B -
Stockholder' Equity 1.20B 394.12M 272.78M 23.09M 175.97M 528.49M 855.76M 2.40B 2.01B 1.66B
Current Ratio 1.10 0.99 1.11 1.59 1.71 1.81 2.30 2.19 2.54 -
TL-to-TA 0.71 0.91 0.95 1.00 0.98 0.96 0.94 0.88 0.91 -

Consistent Reinvestment of Profits over the past 10 years

ADS has consistently retained profits. This may put ADS in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, ADS can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 682.90M 900.30M 1.03B 815.72M 1.13B 1.55B 2.05B 2.54B 3.09B 3.49B
Retained Earnings Growth - 31.83% 14.74% -21.04% 38.65% 37.33% 31.94% 23.98% 21.71% 13.01%

Competitive Industry over the past 10 years

ADS is likely operating in an industry with medium to low barriers to entry. This may mean that ADS doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that ADS invests heavily in R&D and Sales, General & Administrative expenses.

Only $8.43 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 164.06M 217.39M 143.73M 193.74M 315.29M 422.26M 496.17M 516.14M 605.43M -
divided by
Revenue 2.29B 2.03B 1.96B 2.79B 3.17B 3.64B 4.32B 5.30B 6.44B 7.14B
Net Profit Margin 7.16% 10.73% 7.32% 6.94% 9.94% 11.60% 11.49% 9.73% 9.40% -

Varying Pricing Power over the past 10 years

ADS has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. However, there is a substantial variation in their Gross Profit Margins from year-to-year, which indicates inconsistent performance. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$40.14 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 660.16M 683.23M 610.20M 1.25B 3.17B 1.53B 1.77B 2.08B 2.63B -
divided by
Revenue 2.29B 2.03B 1.96B 2.79B 3.17B 3.64B 4.32B 5.30B 6.44B 7.14B
Gross Margin 28.81% 33.74% 31.06% 44.64% 100.00% 42.15% 40.98% 39.30% 40.77% -

Medium Capital Intensity over the past 10 years

ADS has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

34.09% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 116.65M 49.56M 52.97M 68.76M 73.50M 116.46M 135.38M 158.69M 191.68M 207.00M
divided by
Net Income 164.06M 217.39M 143.73M 193.74M 315.29M 422.26M 496.17M 516.14M 605.43M -
Capital Expenditure Ratio 71.10% 22.80% 36.85% 35.49% 23.31% 27.58% 27.28% 30.75% 31.66% -

No Dividend History over the past 10 years

ADS has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 80.81M 73.64M 57.71M 55.71M 57.80M 64.14M 66.87M 62.45M 62.30M 58.90M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 73.67 46.00 65.05 71.32 103.84 144.02 260.05 286.88 276.77 228.50
Dividend Yield - - - - - - - - - -

Strong History of Stock Buybacks over the past 10 years

ADS has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 80.81M 73.64M 57.71M 55.71M 57.80M 64.14M 66.87M 62.45M 62.30M 58.90M
Stock Bought Back - 9.74% 27.61% 3.58% -3.62% -9.88% -4.07% 7.08% 0.23% 5.77%
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