Trade-Ideas: Alliance Data Systems Corporation (ADS) Is Today's New Lifetime High 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 new lifetime high 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 $300.5 million.
  • ADS has traded 3,706 shares today.
  • ADS is trading at a new lifetime high.

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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 35.7. Currently there are 13 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 766,300 shares per day over the past 30 days. Alliance Data Systems has a market cap of $12.9 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.03 and a short float of 12.1% with 4.83 days to cover. Shares are up 0.8% 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 robust revenue growth, growth in earnings per share, compelling growth in net income, solid stock price performance and notable return on equity. 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 20.5%. Since the same quarter one year prior, revenues rose by 17.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ALLIANCE DATA SYSTEMS CORP has improved earnings per share by 40.9% in the most recent quarter compared to the same quarter a year ago. 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 $7.43 versus $6.60 in the prior year. This year, the market expects an improvement in earnings ($12.25 versus $7.43).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 41.0% when compared to the same quarter one year prior, rising from $83.66 million to $118.00 million.
  • Powered by its strong earnings growth of 40.94% and other important driving factors, this stock has surged by 66.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the IT Services industry and the overall market, ALLIANCE DATA SYSTEMS CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.

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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