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Alliance Data (ADS) and Signet Renew Multi-year Agreement

·3 min read

Alliance Data Systems Corporation’s ADS Card Services business has renewed its multi-year agreement with Signet Jewelers Limited SIG. Per the agreement, Alliance Data will continue to provide private label credit card services to Signet.

While Signet boasts being the world's largest retailer of diamond jewelry, Alliance Data provides market-leading payment products and digital solutions, including Bread and Comenity-branded financial services.

Alliance Data’s credit card service spans across Signet's Kay Jewelers, Zales, Jared and Piercing Pagoda banners. Signet also leverages Alliance Data’s ‘enhanced digital suite’ to better serve its clients. The alliance between the companies will help Signet continue to be a leader in omnichannel retailing, boost marketing support and increase purchase option awareness, thus fueling its sales.

Alliance Data’s market-leading, high-growth, high-ROI Card Service segment contributes significantly to the company’s total revenues. Continuous agreements with new and existing clients boost the private label card portfolio. Alliance Data estimates credit sales to increase at a high single to low double-digit rate, with net loss rate below 6% in 2021 and in the mid-to-upper 5% range in the second quarter of 2021.

Though credit card and loan receivables at 2021 end are projected to be in line with 2020 end levels although average receivables are expected to be down mid-single-digits in 2021. Nonetheless, It projects high single-digit to low double-digit card receivables growth as it enters 2022.

Shares of this Zacks Rank #3 (Hold) private label credit card processing company have rallied 61.7% year to date against the industry’s decrease of 1%. We expect higher revenues, solid card services performance, strategic initiatives as well as a robust capital position to sustain the company’s momentum in the near term.

Stocks to Consider

Some better-ranked financial transaction service providers are Equifax EFX and Evertec EVTC, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Equifax delivered earnings surprise of 29.61% in the last reported quarter.

Evertec delivered earnings surprise of 14.81% in the last reported quarter.

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Equifax, Inc. (EFX) : Free Stock Analysis Report

Alliance Data Systems Corporation (ADS) : Free Stock Analysis Report

Signet Jewelers Limited (SIG) : Free Stock Analysis Report

Evertec, Inc. (EVTC) : Free Stock Analysis Report

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