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Alliance Data Systems

Executive Summary

Alliance Data Systems Corporation provides data-driven marketing and loyalty solutions in the United States, Canada, Europe, the Middle East, Africa, the Asia Pacific, and others. More Details


Snowflake Analysis

Very undervalued with reasonable growth potential.


Similar Companies

Share Price & News

How has Alliance Data Systems's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ADS has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-10.4%

ADS

-1.5%

US IT

-0.4%

US Market


1 Year Return

-54.5%

ADS

27.4%

US IT

18.3%

US Market

Return vs Industry: ADS underperformed the US IT industry which returned 27.4% over the past year.

Return vs Market: ADS underperformed the US Market which returned 18.3% over the past year.


Shareholder returns

ADSIndustryMarket
7 Day-10.4%-1.5%-0.4%
30 Day15.7%5.1%6.6%
90 Day13.0%6.7%8.6%
1 Year-53.5%-54.5%28.7%27.4%21.0%18.3%
3 Year-77.3%-78.3%89.7%82.3%42.1%32.7%
5 Year-82.8%-83.7%152.2%132.1%85.6%64.7%

Price Volatility Vs. Market

How volatile is Alliance Data Systems's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Alliance Data Systems undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ADS ($48.61) is trading below our estimate of fair value ($328.09)

Significantly Below Fair Value: ADS is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: ADS is good value based on its PE Ratio (7.4x) compared to the US IT industry average (32.2x).

PE vs Market: ADS is good value based on its PE Ratio (7.4x) compared to the US market (19.2x).


Price to Earnings Growth Ratio

PEG Ratio: ADS is good value based on its PEG Ratio (0.2x)


Price to Book Ratio

PB vs Industry: ADS is good value based on its PB Ratio (2x) compared to the US IT industry average (3.8x).


Next Steps

Future Growth

How is Alliance Data Systems forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

30.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ADS's forecast earnings growth (30.1% per year) is above the savings rate (2.2%).

Earnings vs Market: ADS's earnings (30.1% per year) are forecast to grow faster than the US market (22.1% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: ADS's revenue (0.9% per year) is forecast to grow slower than the US market (9.9% per year).

High Growth Revenue: ADS's revenue (0.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ADS's Return on Equity is forecast to be high in 3 years time (32.7%)


Next Steps

Past Performance

How has Alliance Data Systems performed over the past 5 years?

6.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ADS has a large one-off loss of $186.2M impacting its June 30 2020 financial results.

Growing Profit Margin: ADS's current net profit margins (6%) are lower than last year (15.4%).


Past Earnings Growth Analysis

Earnings Trend: ADS's earnings have grown by 6.4% per year over the past 5 years.

Accelerating Growth: ADS's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: ADS had negative earnings growth (-63.3%) over the past year, making it difficult to compare to the IT industry average (8.1%).


Return on Equity

High ROE: Whilst ADS's Return on Equity (27.74%) is high, this metric is skewed due to their high level of debt.


Next Steps

Financial Health

How is Alliance Data Systems's financial position?


Financial Position Analysis

Short Term Liabilities: ADS's short term assets ($20.6B) exceed its short term liabilities ($11.4B).

Long Term Liabilities: ADS's short term assets ($20.6B) exceed its long term liabilities ($10.3B).


Debt to Equity History and Analysis

Debt Level: ADS's debt to equity ratio (1683%) is considered high.

Reducing Debt: ADS's debt to equity ratio has increased from 668.9% to 1683% over the past 5 years.

Debt Coverage: ADS's debt is not well covered by operating cash flow (6.2%).

Interest Coverage: ADS's interest payments on its debt are well covered by EBIT (6.5x coverage).


Balance Sheet


Next Steps

Dividend

What is Alliance Data Systems's current dividend yield, its reliability and sustainability?

1.73%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: ADS's dividend (1.73%) is higher than the bottom 25% of dividend payers in the US market (1.63%).

High Dividend: ADS's dividend (1.73%) is low compared to the top 25% of dividend payers in the US market (4.56%).


Stability and Growth of Payments

Stable Dividend: ADS has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: ADS has only been paying a dividend for 4 years, and since then payments have fallen.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (31.9%), ADS's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ADS's dividends in 3 years are forecast to be thoroughly covered by earnings (6.5% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.5yrs

Average management tenure


CEO

Ralph Andretta (59 yo)

0.67

Tenure

Mr. Ralph J. Andretta is Chief Executive officer, President and Director at Alliance Data Systems Corporation since February 3, 2020. Mr. Andretta served as managing director and head of U.S. cards busines ...


Leadership Team

NamePositionTenureCompensationOwnership
Timothy King
Executive VP & CFO1.33yrsUS$1.63m0.0057%
$ 131.3k
Laura Santillan
Senior VP & Chief Accounting Officer10.67yrsUS$1.55m0.049%
$ 1.1m
Joseph Motes
Executive VP1.33yrsUS$1.58m0.0093%
$ 215.2k
Charles Horn
Executive VP & Senior Advisor1.75yrsUS$2.65m0.012%
$ 267.4k
John Chesnut
Senior VP & Treasurer5.75yrsUS$1.30m0.0098%
$ 228.5k
Ralph Andretta
CEO, President & Director0.67yrno datano data
Greg Betchkal
Chief Risk Officer2.67yrsno datano data
Jami Dewolf
Chief Marketing Officer of Card Services Business for Alliance Datano datano datano data
Claudia Mennen-Vermeule
Interim Chief Executive Officer of BrandLoyalty1.17yrsno datano data
Tiffany Louder
Investor Relationsno datano datano data

1.5yrs

Average Tenure

57yo

Average Age

Experienced Management: ADS's management team is not considered experienced ( 1.5 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Ralph Andretta
CEO, President & Director0.67yrno datano data
Roger Ballou
Independent Chairman of the Board0.33yrUS$302.68k0.016%
$ 365.5k
Timothy Theriault
Independent Director4yrsUS$247.46k0.0031%
$ 72.8k
John Gerspach
Independent Director0.33yrno data0.010%
$ 243.1k
Sharen Turney
Independent Director1.33yrsUS$206.46k0.0036%
$ 84.0k
Laurie Tucker
Independent Director5.33yrsUS$247.04k0.0084%
$ 194.4k
Rajesh Natarajan
Independent Director0.33yrno datano data

0.7yrs

Average Tenure

63yo

Average Age

Experienced Board: ADS's board of directors are not considered experienced ( 0.7 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3.6%.


Top Shareholders

Company Information

Alliance Data Systems Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Alliance Data Systems Corporation
  • Ticker: ADS
  • Exchange: NYSE
  • Founded: 1996
  • Industry: Data Processing and Outsourced Services
  • Sector: Software
  • Market Cap: US$2.319b
  • Shares outstanding: 47.72m
  • Website: https://www.alliancedata.com

Number of Employees


Location

  • Alliance Data Systems Corporation
  • 3075 Loyalty Circle
  • Columbus
  • Ohio
  • 43219
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ADSNYSE (New York Stock Exchange)YesCommon StockUSUSDJun 2001
LIDDB (Deutsche Boerse AG)YesCommon StockDEEURJun 2001
LIDBST (Boerse-Stuttgart)YesCommon StockDEEURJun 2001
0HCRLSE (London Stock Exchange)YesCommon StockGBUSDJun 2001
ADS1 *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJun 2001
A1LL34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 4 REPR 1 COMBRBRLJan 2020

Biography

Alliance Data Systems Corporation provides data-driven marketing and loyalty solutions in the United States, Canada, Europe, the Middle East, Africa, the Asia Pacific, and others. It operates through two s ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/10/26 00:05
End of Day Share Price2020/10/23 00:00
Earnings2020/06/30
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.