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Alliance Data (ADS) to Report Q4 Earnings: What's in Store?

Zacks Equity Research

Alliance Data Systems Corporation ADS is slated to report fourth-quarter 2019 results on Jan 30.

The Zacks Consensus Estimate for revenues is pegged at $1.5 billion, indicating a decline of 26.9% from the year-ago reported figure. The Zacks Consensus Estimate for earnings is pegged at $4.13, indicating 39.3% decrease from the year-ago quarter's reported number.

Let’s see how things have shaped up for this announcement.

Alliance Data’s fourth-quarter results are likely to benefit from strong performance of Card Services and LoyaltyOne segments.

Card Service, accounting for more than half of the company’s revenues, is likely to have benefited from deal wins from both new and existing clients, which diversified the portfolio into high-growth verticals. Loss and delinquency rates are expected to have declined. The Zacks Consensus Estimate for fourth-quarter average receivable is $18.5 billion, indicating an increase of 10.8% from the year-ago reported figure.

The Zacks Consensus Estimate for EBITDA is pegged at $264 million, indicating a decline of 38.2% from the year-ago reported figure. Revenues are estimated to be $1.2 billion, implying an increase of 6.2% from the year-ago quarter reported figure.

LoyaltyOne is expected to have benefited from BrandLoyalty, driven by growth across Europe, Asia, the United States as well as the company’s expansion efforts in Canada. Revenues are estimated to be $313 million, indicating a decrease of 6% from the year-ago quarter reported figure. The Zacks Consensus Estimate for EBITDA is pegged at $63 million, indicating a decline of 6.5% from the year-ago reported figure.

However, expenses are likely to have increased due to higher cost of operations, general and administrative expense, which might weigh have weighed on operating margins.

The company’s share buyback activity is likely to have aided the bottom line.

The company delivered negative earnings surprise in each of the last two reported quarters of 2019.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Alliance Data this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Alliance Data has an Earnings ESP of -0.20%. This is because the Most Accurate Estimate of $4.21 is pegged lower than the Zacks Consensus Estimate of $4.22. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Alliance Data Systems Corporation Price and EPS Surprise

Alliance Data Systems Corporation Price and EPS Surprise

Alliance Data Systems Corporation price-eps-surprise | Alliance Data Systems Corporation Quote

Zacks Rank: Alliance Data carries a Zacks Rank #4 (Sell).

Stocks to Consider
    

Some stocks from the finance sector that have the perfect mix of elements to surpass estimates this time around are as follows:

Moody’s Corporation MCO is set to report fourth-quarter earnings on Feb 12 and has an Earnings ESP of +0.52%. The company carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fidelity National Information Services, Inc. FIS has an Earnings ESP of +0.65% and a Zacks Rank #2. The company is slated to announce fourth-quarter earnings on Feb 13.

WEX, Inc. WEX has an Earnings ESP of +0.84% and a Zacks Rank of 3. The company is set to report fourth-quarter results on Mar 18.

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