ADS  Alliance Data Systems Corporat...

Exchange

NYSE

Sector

Miscellaneous

Industry

Business Services

Market Cap.

13.54B

Vuru Grade

77.59/100

Current Price

$235.04
+3.63 (+1.57%)

Growth Price

$344.71
Undervalued by 46.66%

Company Metrics

  • P/E 32.02
  • P/S 1.87
  • P/B 8.04
  • EPS 7.34
  • Cash ROIC 13.29%
  • Cash Ratio 0.18
  • Dividend 2.08 / 0.90 %
  • Avg. Vol. 597,190.00
  • Shares 57.61M
  • Market Cap. 13.54B

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) Ex-Dividend Date Scheduled for ...
Nasdaq - Feb 10, 2017
Alliance Data Systems Corporation ( ADS ) will begin trading ex-dividend on February 13, 2017. A cash dividend payment of $0.52 per share is scheduled to be paid on March 17, 2017.
Alliance Data Systems Corporation (ADS) Director Roger H. Ballou Sells 648 Shares - Sports Perspectives
The Artemis Investment Management LLP Purchases Shares of 14361 Alliance Data ... - DailyQuint
Ex-Dividend Reminder: KLA-Tencor, Alliance Data Systems and Jabil Circuit
Forbes - Feb 9, 2017
Looking at the universe of stocks we cover at Dividend Channel, on 2/13/17, KLA-Tencor Corp. (NASD: KLAC), Alliance Data Systems Corp. (NYSE: ADS), and Jabil Circuit, Inc. (NYSE: JBL) will all trade ex-dividend for their respective upcoming dividends.
Alliance Data Systems Corporation Q4 Income Climbs 7%
Nasdaq - Jan 26, 2017
(RTTNews.com) - Alliance Data Systems Corporation ( ADS ) released a profit for its fourth quarter that gained ground from last year.
Alliance Data Systems Corporation (ADS) Rises 2.62% for January 30 - Equities.com
Alliance Data (ADS) Q4 Core Earnings, Revenues Rise Y/Y - Yahoo Finance
The CENTRAL TRUST Co Has $196000 Stake in Alliance Data Systems Corporation (ADS)
DailyQuint - 1 hour ago
CENTRAL TRUST Co raised its position in Alliance Data Systems Corporation (NYSE:ADS) by 4.7% during the third quarter, Holdings Channel reports.
How has Alliance Data Systems Corporation:(NYSE:ADS) performed recently? - The Daily Leicester
Investors Spotlight: Alliance Data Systems Corporation's (ADS) stock price ... - WsNews 4investors
Alliance Data Systems: If You Don't Like The Answer, Just Change The Question
Seeking Alpha - Aug 19, 2016
In the case of Alliance Data Systems, Wall Street is just now waking up to the misrepresentations that have been promulgated by ADS management.
Alliance Data Systems Corporation (ADS) – Citron Short Thesis - ValueWalk
Alliance Data Systems Corporation (ADS) Shares Have 50% Downside Potential ... - TCC
Alliance Data Systems - It May Be Expensive, But There's No Smoking Gun
Seeking Alpha - Nov 3, 2016
Three months ago, short seller Andrew Left of Citron Research published a report stating that Alliance Data Systems (NYSE:ADS) was not a software company that owns a bank, but a bank that owns a software company.
Alliance Data Provides Card Services Performance Update For January 2017
PR Newswire (press release) - Feb 15, 2017
DALLAS, Feb. 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 Stock Volatility Hits A Plunging Low - CML News
Alliance Data Systems Corporation (ADS) Stake Cut by Investec Asset Management ... - Sports Perspectives
Alliance Data Systems: The Important Thing Citron Research Got Wrong About The ...
Seeking Alpha - Sep 1, 2016
Citron Research has recently published a research report on Alliance Data Systems (NYSE:ADS) with a target price of $100, implying 50% downside to the stock.
TheStreet Downgrades Alliance Data Systems Corporation (ADS) to C
Sports Perspectives - Feb 1, 2017
TheStreet downgraded shares of Alliance Data Systems Corporation (NYSE:ADS) from a b- rating to a c rating in a research note released on Thursday morning.
Insider Trading at Alliance Data Systems Corporation? - The Cerbat Gem
The Alliance Data Systems Corp. (ADS) Position Increased by Boys Arnold & Co. Inc. - DailyQuint
Alliance Data Systems' (ADS) CEO Edward Heffernan on Q3 2016 Results ...
Seeking Alpha - Oct 20, 2016
Good morning, and welcome to the Alliance Data Third Quarter 2016 Earnings Conference Call. At this time, all parties will have been placed on a listen-only mode.
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.

$235.04 Current Price

$344.71 Growth Price (DCF)

Undervalued by 46.66%


Growth Rate Assumed by Market: 4.27%


Future Free Cash Flow Growth Rate: 15.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$1,121.30 Book Price

Undervalued by 377.07%


Shrinking Cash Return on Invested Capital over the past 5 years

ADS has less efficiently invested its financial resources in buildings, projects, and equipment, resulting in increasingly weaker returns. Look at its Annual Reports to determine whether this decrease has been caused by one-time events or a more general decrease in investment returns.

ADS has created $13.29 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20112012201320142015
Free Cash Flow 937.85M 1.02B 868.12M 1.19B 1.51B
divided by
Invested Capital 4.91B 6.07B 7.76B 12.88B 14.85B
Cash ROIC 19.11% 16.76% 11.18% 9.20% 10.20%

Varying Return on Equity over the past 5 years

ADS has generated strong profits with money shareholders have invested. However, there is a substantial variation in their Return on Equity from year-to-year. This may reflect management's inability to generate consistent returns or may be caused by one-time events. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

ADS has generated $73.74 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20112012201320142015
Net Income 315.29M 422.26M 496.17M 516.14M 605.43M
divided by
Stockholders' Equity 175.97M 528.49M 855.76M 2.40B 2.01B
Return on Equity 179.17% 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
2006200720082009201020112012201320142015
Free Cash Flow 368.43M 454.87M 401.46M 305.44M 833.95M 937.85M 1.02B 868.12M 1.19B 1.51B

Weak Balance Sheet

ADS's financial position is not ideal. The key is to check whether ADS is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Cash 180.08M 265.84M 156.91M 213.38M 139.11M 216.21M 893.35M 969.82M 1.08B 1.17B
Current Assets 1.31B 1.45B 1.94B 2.36B 6.13B 6.61B 9.13B 10.40B 13.81B 16.25B
Total Assets 3.40B 4.10B 4.36B 5.23B 8.27B 8.98B 12.00B 13.24B 20.26B 22.42B
Current Liabilities 877.72M 1.33B 1.95B 2.13B 3.86B 3.86B 5.03B 4.51B 6.31B 6.41B
Total Liabilities 2.33B 2.91B 3.96B 4.95B 8.25B 8.80B 11.47B 12.39B 17.87B 20.41B
Stockholder' Equity 1.07B 1.20B 394.12M 272.78M 23.09M 175.97M 528.49M 855.76M 2.40B 2.01B
Current Ratio 1.49 1.10 0.99 1.11 1.59 1.71 1.81 2.30 2.19 2.54
TL-to-TA 0.69 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
2006200720082009201020112012201320142015
Retained Earnings 527.69M 682.90M 900.30M 1.03B 815.72M 1.13B 1.55B 2.05B 2.54B 3.09B
Retained Earnings Growth - 29.41% 31.83% 14.74% -21.04% 38.65% 37.33% 31.94% 23.98% 21.71%

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 $9.38 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Net Income 189.61M 164.06M 217.39M 143.73M 193.74M 315.29M 422.26M 496.17M 516.14M 605.43M
divided by
Revenue 2.00B 2.29B 2.03B 1.96B 2.79B 3.17B 3.64B 4.32B 5.30B 6.44B
Net Profit Margin 9.49% 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.

$42.97 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
2006200720082009201020112012201320142015
Gross Profit 564.12M 660.16M 683.23M 610.20M 1.25B 3.17B 1.53B 1.77B 2.08B 2.63B
divided by
Revenue 2.00B 2.29B 2.03B 1.96B 2.79B 3.17B 3.64B 4.32B 5.30B 6.44B
Gross Margin 28.22% 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.

35.98% 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
2006200720082009201020112012201320142015
Capital Expenditure 100.35M 116.65M 49.56M 52.97M 68.76M 73.50M 116.46M 135.38M 158.69M 191.68M
divided by
Net Income 189.61M 164.06M 217.39M 143.73M 193.74M 315.29M 422.26M 496.17M 516.14M 605.43M
Capital Expenditure Ratio 52.93% 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
2006200720082009201020112012201320142015
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 81.69M 80.81M 73.64M 57.71M 55.71M 57.80M 64.14M 66.87M 62.45M 62.30M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 62.47 73.67 46.00 65.05 71.32 103.84 144.02 260.05 286.88 276.77
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
2006200720082009201020112012201320142015
Shares Outstanding 81.69M 80.81M 73.64M 57.71M 55.71M 57.80M 64.14M 66.87M 62.45M 62.30M
Stock Bought Back - 1.08% 9.74% 27.61% 3.58% -3.62% -9.88% -4.07% 7.08% 0.23%
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