Trade-Ideas: Alliance Data Systems Corporation (ADS) Is Today's Post-Market Laggard Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Alliance Data Systems Corporation ( ADS) as a post-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Alliance Data Systems Corporation as such a stock due to the following factors:

  • ADS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $172.9 million.
  • ADS is down 4.6% today from today's close.

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More details on ADS:

Alliance Data Systems Corporation provides marketing and loyalty solutions primarily in North America. The company operates in three segments: LoyaltyOne, Epsilon, and Private Label Services and Credit. ADS has a PE ratio of 28.4. Currently there are 14 analysts that rate Alliance Data Systems Corporation a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Alliance Data Systems Corporation has been 723,100 shares per day over the past 30 days. Alliance Data Systems has a market cap of $9.3 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.80 and a short float of 23.4% with 10.70 days to cover. Shares are up 30.4% year to date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Alliance Data Systems Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 14.1%. Since the same quarter one year prior, revenues rose by 18.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the IT Services industry average. The net income increased by 11.9% when compared to the same quarter one year prior, going from $115.23 million to $128.98 million.
  • Net operating cash flow has increased to $279.00 million or 16.43% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -20.99%.
  • ALLIANCE DATA SYSTEMS CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ALLIANCE DATA SYSTEMS CORP increased its bottom line by earning $6.60 versus $5.46 in the prior year. This year, the market expects an improvement in earnings ($9.90 versus $6.60).
  • 41.10% is the gross profit margin for ALLIANCE DATA SYSTEMS CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 12.24% trails the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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