NYSE:ADS

Stock Analysis Report

Alliance Data Systems

Executive Summary

Alliance Data Systems Corporation provides data-driven marketing and loyalty solutions worldwide.

Snowflake

Fundamentals

Good value with mediocre balance sheet.


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


Market Performance


7 Day Return

4.2%

ADS

3.5%

US IT

3.4%

US Market


1 Year Return

-41.9%

ADS

22.1%

US IT

5.4%

US Market

Return vs Industry: ADS underperformed the US IT industry which returned 22.1% over the past year.

Return vs Market: ADS underperformed the US Market which returned 5.4% over the past year.


Shareholder returns

ADSIndustryMarket
7 Day4.2%3.5%3.4%
30 Day-7.5%0.5%-1.0%
90 Day-17.9%-1.5%-0.4%
1 Year-41.0%-41.9%23.4%22.1%7.7%5.4%
3 Year-39.3%-41.4%99.6%91.3%46.2%36.8%
5 Year-52.2%-53.9%155.4%132.0%65.6%47.5%

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?

7.52x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Undervalued: ADS ($123.7) is trading above our estimate of fair value ($93.02)

Significantly Undervalued: ADS is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: ADS is good value based on its PE Ratio (7.5x) compared to the IT industry average (36.5x).

PE vs Market: ADS is good value based on its PE Ratio (7.5x) compared to the US market (17.7x).


Price to Earnings Growth Ratio

Low PEG Ratio: ADS is good value based on its PEG Ratio (0.9x)


Price to Book Ratio

PB vs Industry: ADS is good value based on its PB Ratio (2.6x) compared to the US IT industry average (4.3x).


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?

8.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ADS's forecast earnings growth (8.3% per year) is above the savings rate (2.7%).

Earnings vs Market: ADS's earnings (8.3% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: ADS's earnings are forecast to grow, but not significantly.

Revenue vs Market: ADS's revenue (4.3% per year) is forecast to grow slower than the US market (7.3% per year).

High Growth Revenue: ADS's revenue (4.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: ADS's Return on Equity is forecast to be high in 3 years time (32.8%)


Next Steps

Past Performance

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

15.7%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: ADS's earnings have grown by 15.7% 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 (-3.5%) over the past year, making it difficult to compare to the IT industry average (8.4%).


Return on Equity

High ROE: Whilst ADS's Return on Equity (36.8%) is high, this metric is skewed due to their high level of debt.


Return on Assets

ROA vs Industry: ADS's Return on Assets is below or equal to the IT industry average last year.


Return on Capital Employed

ROCE Improving: ADS's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is Alliance Data Systems's financial position?


Financial Position Analysis

Short Term Liabilities: ADS's short term assets ($28.3B) exceeds its short term liabilities ($10.6B)

Long Term Liabilities: ADS's short term assets (28.3B) exceeds its long term liabilities (17.7B)


Debt to Equity History and Analysis

Debt Level: ADS's debt to equity ratio (1048.9%) is considered high

Reducing Debt: ADS's debt to equity ratio has increased from 796.9% to 1048.9% over the past 5 years.

Debt Coverage: ADS's debt is not well covered by operating cash flow (10.1%).

Interest Coverage: ADS's interest payments on its debt are well covered by EBIT (5.1x coverage).


Balance Sheet

Inventory Level: ADS has a low level of unsold assets or inventory.

Debt Coverage by Assets: ADS's debt is covered by short term assets (assets are 1.127020x debt).


Next Steps

Dividend

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

2.04%

Current Dividend Yield


Dividend Yield vs Market

company2.0%marketbottom25%1.5%markettop25%3.8%industryaverage1.3%forecastin3Years2.0%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: ADS's dividend (2.04%) is higher than the bottom 25% of dividend payers in the US market (1.46%).

High Dividend: ADS's dividend (2.04%) is low compared to the top 25% of dividend payers in the US market (3.77%).

Stable Dividend: Whilst dividend payments have been stable, ADS has been paying a dividend for less than 10 years.

Growing Dividend: ADS's dividend payments have increased, but the company has only paid a dividend for 3 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (14.6%), ADS's dividend payments are thoroughly covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ADS's dividends in 3 years are forecast to be thoroughly covered by earnings (10.2% payout ratio).


Next Steps

Management

What is the CEO of Alliance Data Systems's salary, the management and board of directors tenure and is there insider trading?

0.5yrs

Average management tenure


CEO

Melisa Miller (60yo)

0.3yrs

Tenure

US$3,654,015

Compensation

Ms. Melisa A. Miller has been President, Chief Executive Officer and Director at Alliance Data Systems Corp. since June 05, 2019. She served as Executive Vice President and President of Card Services at Al ...


CEO Compensation Analysis

Compensation vs. Market: Melisa has recently become CEO, making it difficult to compare their total compensation against companies of similar size in the US market.

Compensation vs Earnings: Melisa's compensation has been consistent with company performance over the past year.


Management Age and Tenure

0.5yrs

Average Tenure

56.5yo

Average Age

Experienced Management: ADS's management team is not considered experienced ( 0.5 years average tenure), which suggests a new team.


Board Age and Tenure

4.3yrs

Average Tenure

62yo

Average Age

Experienced Board: ADS's board of directors are considered experienced (4.3 years average tenure).


Insider Trading

Insider Buying: ADS insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$406,37001 Aug 19
Timothy King
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares2,600
Max PriceUS$156.30
SellUS$39,719,50030 Nov 18
ValueAct Capital Management L.P.
EntityCompany
Shares200,000
Max PriceUS$199.10
SellUS$135,000,00008 Nov 18
ValueAct Capital Management L.P.
EntityCompany
Shares675,000
Max PriceUS$200.00

Ownership Breakdown


Management Team

  • Charles Horn (58yo)

    Executive VP & Vice Chairman

    • Tenure: 0.8yrs
    • Compensation: US$2.96m
  • Joseph Motes (57yo)

    Executive VP

    • Tenure: 0.3yrs
  • Claudia Mennen-Vermeule (46yo)

    Interim Chief Executive Officer of BrandLoyalty

    • Tenure: 0.2yrs
  • Laura Santillan (47yo)

    Senior VP & Chief Accounting Officer

    • Tenure: 9.7yrs
  • Melisa Miller (60yo)

    President

    • Tenure: 0.3yrs
    • Compensation: US$3.65m
  • Jami Dewolf

    Chief Marketing Officer of Card Services Business for Alliance Data

    • Tenure: 0yrs
  • Jeff Chesnut

    Senior VP & Treasurer

    • Tenure: 4.8yrs
  • Tiffany Louder

    Investor Relations

    • Tenure: 0yrs
  • Greg Betchkal

    Chief Risk Officer

    • Tenure: 1.7yrs
  • Tim King (56yo)

    Executive VP & CFO

    • Tenure: 0.3yrs

Board Members

  • Bruce Anderson (79yo)

    Director

    • Tenure: 23.2yrs
    • Compensation: US$251.85k
  • Rob Minicucci (67yo)

    Non-Executive Chairman

    • Tenure: 9.8yrs
    • Compensation: US$422.53k
  • Roger Ballou (68yo)

    Director

    • Tenure: 18.7yrs
    • Compensation: US$286.18k
  • Ken Jensen (75yo)

    Director

    • Tenure: 18.7yrs
    • Compensation: US$255.26k
  • Tim Theriault (58yo)

    Director

    • Tenure: 3yrs
    • Compensation: US$254.76k
  • Kelly Barlow (50yo)

    Director

    • Tenure: 2.3yrs
    • Compensation: US$253.76k
  • Sharen Turney (62yo)

    Director

    • Tenure: 0.3yrs
  • Laurie Tucker (62yo)

    Director

    • Tenure: 4.3yrs
    • Compensation: US$271.13k
  • Melisa Miller (60yo)

    President

    • Tenure: 0.3yrs
    • Compensation: US$3.65m

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$5.696b
  • Shares outstanding: 46.05m
  • 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

Biography

Alliance Data Systems Corporation provides data-driven marketing and loyalty solutions worldwide. It operates through three segments: LoyaltyOne, Epsilon, and Card Services. The company offers a portfolio  ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/15 23:31
End of Day Share Price2019/10/15 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


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.