Alliance Data Systems Corp

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ADS : NYSE : Services
$212.95 -1.26 | -0.59%
Today's Range: 212.15 - 216.07
Avg. Daily Volume: 789,200
09/29/16 - 4:02 PM ET

Financial Analysis

ALLIANCE DATA SYSTEMS CORP's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased, representing a decrease to the bottom line. ALLIANCE DATA SYSTEMS CORP is extremely liquid. Currently, the Quick Ratio is 2.17 which clearly shows the ability to cover any short-term cash needs. ADS managed to increase the liquidity from the same period a year ago, despite already having very strong liquidity to begin with. This would indicate improved cash flow.

During the same period, stockholders' equity ("net worth") has decreased by 11.71% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial difficulties in the near future.

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Income Statement Q2 FY16 Q2 FY15
Net Sales ($mil)1748.91500.62
EBITDA ($mil)450.2407.83
EBIT ($mil)320.6285.72
Net Income ($mil)73.1131.34

Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)1821.61345.91
Total Assets ($mil)22771.219547.44
Total Debt ($mil)18581.714651.39
Equity ($mil)1729.71959.15

Profitability Q2 FY16 Q2 FY15
Gross Profit Margin41.2240.26
EBITDA Margin25.7427.17
Operating Margin18.3319.04
Sales Turnover0.30.3
Return on Assets2.132.53
Return on Equity28.1625.28
Debt Q2 FY16 Q2 FY15
Current Ratio2.232.2
Interest Expense103.780.72
Interest Coverage3.093.54

Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)58.661.72
Div / share0.00.0
Book value / share29.5231.74
Institutional Own % n/a n/a
Avg Daily Volume833227.0820010.0


HOLD. The current P/E ratio indicates a discount compared to an average of 27.47 for the IT Services industry and a premium compared to the S&P 500 average of 25.19. For additional comparison, its price-to-book ratio of 7.39 indicates a significant premium versus the S&P 500 average of 2.82 and a discount versus the industry average of 8.10. The price-to-sales ratio is similar to the S&P 500 average, but it is significantly below the industry average, indicating a discount. Upon assessment of these and other key valuation criteria, ALLIANCE DATA SYSTEMS CORP proves to trade at a discount to investment alternatives within the industry.

1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
ADS 27.19 Peers 27.47   ADS 6.95 Peers 20.56

Average. An average P/E ratio can signify an industry neutral price for a stock and an average growth expectation.

ADS is trading at a valuation on par with its peers.


Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

ADS is trading at a significant discount to its peers.

1 2 3 4 5
premium   discount
  Price to
1 2 3 4 5
premium   discount
ADS 11.48 Peers 21.95   ADS 0.30 Peers 2.41

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

ADS is trading at a significant discount to its peers.


Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

ADS trades at a significant discount to its peers.

1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
ADS 7.39 Peers 8.10   ADS -0.13 Peers 21.96

Average. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

ADS is trading at a valuation on par with its peers.


Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, ADS is expected to significantly trail its peers on the basis of its earnings growth rate.

1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
ADS 1.89 Peers 5.57   ADS 14.49 Peers 22.90

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

ADS is trading at a significant discount to its industry on this measurement.


Lower. A sales growth rate that trails the industry implies that a company is losing market share.

ADS significantly trails its peers on the basis of sales growth



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