ADS  Alliance Data Systems Corporat...

Exchange

NYSE

Sector

Miscellaneous

Industry

Business Services

Market Cap.

14.47B

Vuru Grade

72.66/100

Current Price

$259.96
-0.95 (-0.36%)

Growth Price

$428.20
Undervalued by 64.72%

Stability Price

$169.91
Overvalued by 34.64%

Company Metrics

  • P/E 34.50
  • P/S 1.98
  • P/B 10.68
  • EPS 7.53
  • Cash ROIC 32.16%
  • Cash Ratio -
  • Dividend 2.08 / 0.80 %
  • Avg. Vol. 681,448.00
  • Shares 55.66M
  • Market Cap. 14.47B

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: Continued Impressive Growth Faces Significant Headwinds
Seeking Alpha - Jun 22, 2017
Alliance Data Systems Corporation (NYSE:ADS) excited investors with a top and bottom line first-quarter beat. Earnings per share beat consensus estimates by $0.05 and revenue grew by nearly 12% year-over-year.
Alliance Data Systems Corp (NYSE:ADS) Stock Price Down as Sentiment Worsens - Weekly Register
Signature Financial Management Inc. Has $215000 Stake in Alliance Data Systems ... - The Cerbat Gem
Alliance Data Systems Corporation (ADS) Position Boosted by Invictus RG
Insider Tradings - 9 hours ago
Invictus RG increased its position in Alliance information Systems Corporation (NYSE:ADS) by 189.7% during the Q1, based on the latest 13F form document with the Security and Exchange Commission.
Is Buying Alliance Data Systems Corporation (NYSE:ADS), Having Lower Short ... - Weekly Register
BlueCrest Capital Management Ltd Has $657000 Stake in Alliance Data Systems ... - The Cerbat Gem
Alliance Data's (ADS) Unit Inks New Deal with Disney EMEA
Nasdaq - Jun 19, 2017
Alliance Data Systems Corp. 's ADS Europe-based BrandLoyalty business, a program of the LoyaltyOne unit within its fold, recently inked a multi-year agreement with Disney EMEA.
Alliance Data Schedules Second-Quarter 2017 Earnings Conference Call For July ... - PR Newswire (press release)
Burney Co. Has $1.90 Million Position in Alliance Data Systems Corporation (ADS) - The Cerbat Gem
Alliance Data Provides Card Services Performance Update For May 2017
PR Newswire (press release) - Jun 15, 2017
DALLAS, June 15, 2017 /PRNewswire/ -- Alliance Data Systems Corporation (NYSE: ADS), a leading global provider of data-driven marketing and loyalty solutions, today provided an update on its Card Services segment.
Alliance Data Systems Corporation (ADS) Downgraded by Zacks Investment ... - The Cerbat Gem
Analysts See $3.50 EPS for Alliance Data Systems Corporation (ADS) - WeeklyHub
As Alliance Data Systems Corporation (ADS) Market Valuation Rose, Holder ...
Weekly Register - 16 hours ago
Investors sentiment decreased to 0.76 in Q4 2016. Its down 0.15, from 0.91 in 2016Q3. It worsened, as 40 investors sold ADS shares while 196 reduced holdings.
Alliance Data Systems Corporation (ADS) and Vectrus (VEC) Critical Survey - Sports Perspectives
Crosslink Capital Has Cut Alliance Data Systems (ADS) Stake By $2.34 Million ... - UtahHerald.com
Alliance Data To Participate At The Cowen & Company 45th Annual Technology ...
PR Newswire (press release) - May 30, 2017
DALLAS, May 30, 2017 /PRNewswire/ -- Alliance Data Systems Corporation (NYSE: ADS), a leading global provider of data-driven marketing and loyalty solutions, today announced that Charles Horn, chief financial officer, will present in a fireside chat at ...
These Stock's are Flying High, But Don't Go Contrarian Yet: Alliance Data ... - StockNewsJournal
Cryder Capital Partners Llp Boosted Its Stake in Alliance Data Systems ... - Weekly Register
Alliance Data Systems Corporation (NYSE:ADS) Shareholder Yield in Focus
Financial Newsweek - 9 hours ago
The Current Ratio of Alliance Data Systems Corporation (NYSE:ADS) is 2.09. The Current Ratio is used by investors to determine whether a company can pay short term and long term debts.
Alliance Data To Participate At The 2017 RBC Capital Markets Financial ...
PR Newswire (press release) - Jun 13, 2017
DALLAS, June 13, 2017 /PRNewswire/ -- Alliance Data Systems Corporation (NYSE: ADS), a leading global provider of data-driven marketing and loyalty solutions, today announced that Charles Horn, chief financial officer, will present at a fireside chat ...
Alliance Data Systems Co. (ADS) Stake Lowered by Credit Agricole SA - The Cerbat Gem
Cryder Capital Partners Llp Holds Stake in Alliance Data Systems Corporation (ADS) - Finance News Daily
Alliance Data to Participate at the William Blair 2017 Growth Stock Conference
PR Newswire (press release) - Jun 5, 2017
DALLAS, June 5, 2017 /PRNewswire/ -- Alliance Data Systems Corporation (NYSE: ADS), a leading global provider of data-driven marketing and loyalty solutions, today announced that Ed Heffernan, chief executive officer, will present at the William Blair ...
Risk Malaise Alert in Option Market: Alliance Data Systems Corporation Implied ...
CML News - Jun 26, 2017
Before we dive into any analysis we simply note that Alliance Data Systems Corporation (NYSE:ADS) risk is actually priced pretty low by the option market as of right now.
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.

$259.96 Current Price

$428.20 Growth Price (DCF)

Undervalued by 64.72%


Growth Rate Assumed by Market: 1.44%


Future Free Cash Flow Growth Rate: 15.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$169.91 Stability Price (EPV)

Overvalued by 34.64%


Discount Rate: 15.0%

$- NCA Price

Overvalued by 100.00%

$1,050.23 Book Price

Undervalued by 304.00%


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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