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Why Should You Hold Alliance Data (ADS) in Your Portfolio?

Zacks Equity Research
·3 min read

Alliance Data Systems Corporation ADS is poised for growth on the strength of its Card Service segment and solid capital position. The stock carries a favorable VGM Score of A. The expected long-term earnings growth is pegged at 6.2%.

Return on equity of 41.9% in the trailing twelve months was better than the industry average of 33.4%, reflecting the company’s efficiency in utilizing shareholders’ fund.  

The company is expected to continue benefiting from current trends in consumer-based business shifting their marketing spend to data-driven marketing strategies. Organic growth has been a key strength of Alliance Data.  Solid receivables growth in Card Services along with strong LoyaltyOne should drive the top line of the firm.

Alliance Data continues to focus more on its market-leading high-growth, high-ROI Card Service segment, which contributes the lion’s share of its total revenues. Alliance Data divested Epsilon to Publicis Groupe for $4.4 billion in July 2019. The divestiture also provided significant liquidity to return capital to shareholders and improve capital structure.

The company also makes strategic acquisitions that expands international footprint, consolidates its position in digital agency, boosts the LoyaltyOne business, strengthens position in the digital marketing channels, and expands its Omni-Channel distribution capabilities.

Also, Alliance Data has a strong balance sheet by virtue of its solid cash position. The company’s current dividend yield of 1.8% betters the industry average of 0.6%. This makes the stock an attractive pick for yield-seeking investors. Alliance Data carries a Zacks Rank #3 (Hold).

Shares of the company have lost 57.1% against the industry’s increase of 0.3%.


Stocks to Consider

Some better-ranked financial transaction service providers are EVO Payments, Inc. EVOP, Equifax Inc. EFX and Green Dot Corporation GDOT, each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EVO Payments operates as an integrated merchant acquirer and payment processor in the Americas and Europe. The company outpaced estimates in the last four quarters, the positive surprise being 31.32%, on average.

Equifax provides information solutions and human resources business process outsourcing services for businesses, governments, and consumers.  The company outpaced estimates in the last four quarters, the positive surprise being 4.23%, on average.

Green Dot operates as a financial technology and bank holding company in the United States. The company outpaced estimates in the last four quarters, the positive surprise being 247.59%, on average.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>


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Equifax, Inc. (EFX) : Free Stock Analysis Report
Alliance Data Systems Corporation (ADS) : Free Stock Analysis Report
Green Dot Corporation (GDOT) : Free Stock Analysis Report
EVO Payments, Inc. (EVOP) : Free Stock Analysis Report
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