Alliance Data Systems Corp

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ADS : NYSE : Financial
$230.55 | %
Today's Range: 229.22 - 231.6
Avg. Daily Volume: 566800.0
01/20/17 - 4:02 PM ET

Financial Analysis


ALLIANCE DATA SYSTEMS CORP's gross profit margin for the third quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. The company managed to grow both sales and net income at a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year ago. ALLIANCE DATA SYSTEMS CORP is extremely liquid. Currently, the Quick Ratio is 2.27 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 8.42% 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 Q3 FY16 Q3 FY15
Net Sales ($mil)1885.51589.12
EBITDA ($mil)547.6475.45
EBIT ($mil)420.9352.07
Net Income ($mil)207.4128.43


Balance Sheet Q3 FY16 Q3 FY15
Cash & Equiv. ($mil)1961.11477.43
Total Assets ($mil)23639.820300.67
Total Debt ($mil)19339.315294.77
Equity ($mil)1783.81947.89


Profitability Q3 FY16 Q3 FY15
Gross Profit Margin44.5443.3
EBITDA Margin29.0429.91
Operating Margin22.3222.16
Sales Turnover0.30.3
Return on Assets2.392.26
Return on Equity31.7323.59
Debt Q3 FY16 Q3 FY15
Current Ratio2.372.36
Debt/Capital0.920.89
Interest Expense108.382.1
Interest Coverage3.894.29


Share Data Q3 FY16 Q3 FY15
Shares outstanding (mil)57.861.12
Div / share0.00.0
EPS3.552.08
Book value / share30.8631.87
Institutional Own % n/a n/a
Avg Daily Volume596281.0715819.0

Valuation


BUY. ALLIANCE DATA SYSTEMS CORP's P/E ratio indicates a discount compared to an average of 27.94 for the IT Services industry and a value on par with the S&P 500 average of 25.49. For additional comparison, its price-to-book ratio of 7.64 indicates a significant premium versus the S&P 500 average of 2.84 and a discount versus the industry average of 8.33. 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.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
ADS 24.83 Peers 27.94   ADS 6.90 Peers 19.79

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

ADS is trading at a discount to 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 12.60 Peers 21.69   ADS 0.27 Peers 1.66

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 7.64 Peers 8.33   ADS 28.76 Peers 12.63

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.

 

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

ADS is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
ADS 1.93 Peers 5.35   ADS 14.29 Peers 16.93

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 trails its peers on the basis of sales growth

 

 

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