Alliance Data Systems Corp

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ADS : NYSE : Services
$202.32 up 1.60 | 0.81%
Today's Range: 199.09 - 203.74
Avg. Daily Volume: 877,000
08/31/16 - 10:51 AM 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
Debt/Capital0.910.88
Interest Expense103.780.72
Interest Coverage3.093.54


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)58.661.72
Div / share0.00.0
EPS1.242.11
Book value / share29.5231.74
Institutional Own % n/a n/a
Avg Daily Volume867849.0821914.0

Valuation


HOLD. ALLIANCE DATA SYSTEMS CORP's P/E ratio indicates a discount compared to an average of 26.80 for the IT Services industry and a value on par with the S&P 500 average of 25.13. For additional comparison, its price-to-book ratio of 6.79 indicates a significant premium versus the S&P 500 average of 2.82 and a discount versus the industry average of 7.89. The price-to-sales ratio is below the S&P 500 average and is well 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.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
ADS 24.98 Peers 26.80   ADS 6.39 Peers 20.02

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.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
ADS 10.55 Peers 21.38   ADS 0.28 Peers 2.35

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.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
ADS 6.79 Peers 7.89   ADS -0.13 Peers 20.43

Discount. 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 discount to 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.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
ADS 1.74 Peers 5.31   ADS 14.49 Peers 21.79

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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