Zacks Investment Research upgraded shares of Alliance Data Systems (NYSE:ADS) from a hold rating to a buy rating in a research report released on Wednesday, July 25th. The brokerage currently has $261.00 target price on the business services provider’s stock.
According to Zacks, “Alliance Data’s second-quarter bottom line beat estimates on the strength of Card Services and LoyaltyOne segment results. Organic growth at Alliance Data remained a key strength, indicated by solid revenues. Strategic acquisitions helped the company grow inorganically. Solid receivables growth in Card Services along with strong LoyaltyOne and Epsilon segments should consistently drive the top line. Sturdy balance sheet position leads to effective capital deployment. A lowered corporate tax rate, reducing net deferred tax liabilities and future cash tax, will likely rake in additional $100 million in free cash flow. For 2018, core EPS is expected between $22.50 and $23on $8.2 billion revenues. However, rising debt level driving higher interest expenses, higher operating expenses eroding pre-tax margin and reliance on limited clients for revenues are a woe. Shares of the company have underperformed the industry year to date.”
Several other research analysts have also weighed in on ADS. UBS Group initiated coverage on Alliance Data Systems in a research report on Tuesday, March 27th. They issued a neutral rating and a $238.00 target price on the stock. Royal Bank of Canada reissued a buy rating on shares of Alliance Data Systems in a report on Thursday, March 29th. Wedbush lowered their price objective on Alliance Data Systems from $252.00 to $230.00 and set a neutral rating on the stock in a report on Monday, April 2nd. They noted that the move was a valuation call. Piper Jaffray Companies reissued a buy rating and set a $313.00 price objective on shares of Alliance Data Systems in a report on Friday, April 6th. Finally, JMP Securities lowered their price objective on Alliance Data Systems from $310.00 to $270.00 and set a positive rating on the stock in a report on Thursday, April 12th. Three research analysts have rated the stock with a sell rating, nine have issued a hold rating and eleven have assigned a buy rating to the company. The stock currently has a consensus rating of Hold and a consensus price target of $262.06.
Alliance Data Systems (NYSE:ADS) last issued its earnings results on Thursday, July 19th. The business services provider reported $5.01 earnings per share for the quarter, topping the consensus estimate of $4.64 by $0.37. Alliance Data Systems had a return on equity of 59.18% and a net margin of 11.35%. The company had revenue of $1.97 billion for the quarter, compared to analyst estimates of $1.93 billion. During the same period in the prior year, the firm posted $3.84 EPS. The business’s revenue was up 8.1% compared to the same quarter last year. equities research analysts expect that Alliance Data Systems will post 21.6 earnings per share for the current fiscal year.
The firm also recently announced a quarterly dividend, which will be paid on Wednesday, September 19th. Shareholders of record on Tuesday, August 14th will be issued a $0.57 dividend. This represents a $2.28 dividend on an annualized basis and a yield of 1.00%. The ex-dividend date of this dividend is Monday, August 13th. Alliance Data Systems’s dividend payout ratio (DPR) is currently 12.47%.
Alliance Data Systems announced that its board has initiated a share buyback plan on Monday, July 30th that allows the company to repurchase $500.00 million in outstanding shares. This repurchase authorization allows the business services provider to reacquire up to 4% of its shares through open market purchases. Shares repurchase plans are often a sign that the company’s leadership believes its stock is undervalued.
In other Alliance Data Systems news, insider Valueact Capital Master Fund, bought 2,646 shares of the stock in a transaction on Tuesday, May 15th. The shares were purchased at an average price of $205.00 per share, with a total value of $542,430.00. The transaction was disclosed in a document filed with the SEC, which can be accessed through this hyperlink. Also, CFO Charles L. Horn sold 16,035 shares of the firm’s stock in a transaction that occurred on Tuesday, July 24th. The shares were sold at an average price of $232.58, for a total value of $3,729,420.30. Following the completion of the sale, the chief financial officer now directly owns 28,688 shares in the company, valued at approximately $6,672,255.04. The disclosure for this sale can be found here. Company insiders own 2.60% of the company’s stock.
A number of institutional investors and hedge funds have recently added to or reduced their stakes in ADS. Allianz Asset Management GmbH bought a new stake in shares of Alliance Data Systems in the 4th quarter worth approximately $684,000. Two Sigma Advisers LP bought a new stake in shares of Alliance Data Systems in the 4th quarter worth approximately $1,653,000. Raymond James & Associates lifted its position in shares of Alliance Data Systems by 6.0% in the 4th quarter. Raymond James & Associates now owns 16,152 shares of the business services provider’s stock worth $4,094,000 after acquiring an additional 913 shares during the period. Jane Street Group LLC lifted its position in shares of Alliance Data Systems by 233.6% in the 4th quarter. Jane Street Group LLC now owns 1,737 shares of the business services provider’s stock worth $440,000 after acquiring an additional 3,037 shares during the period. Finally, MetLife Investment Advisors LLC bought a new stake in shares of Alliance Data Systems in the 4th quarter worth approximately $3,770,000. 93.77% of the stock is currently owned by hedge funds and other institutional investors.
Alliance Data Systems Company Profile
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 of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, end-to-end marketing services, analytics and creative services, direct marketing services, and private label and co-brand retail credit card programs.
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