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Is a Beat in Store for Alliance Data (ADS) in Q3 Earnings?

Zacks Equity Research

Alliance Data Systems Corporation ADS is slated to report third-quarter 2019 results on Oct 24, before market open. The company delivered negative earnings surprise in the last two reported quarters of 2019.

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

Alliance Data’s third-quarter results are likely to have benefited 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, diversifying the portfolio into high-growth verticals. Loss and delinquency rates are expected to have declined. The Zacks Consensus Estimate for third quarter average receivable is $17.6 billion, indicating an increase of 1.1% from the year-ago reported figure.

The Zacks Consensus Estimate for EBITDA is pegged at $369 million, indicating a decline of 10.9% from the year-ago reported figure. Revenues are estimated to be $1.2 billion, implying an increase of 1.1% 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 $260 million, indicating no change from the year-ago quarter reported figure. The Zacks Consensus Estimate for EBITDA is pegged at $60 million, indicating a decline of 4.8% from the year-ago reported figure.

However, expenses are likely to have increased due to strategic initiatives including expansion efforts, which might weigh have weighed on operating margins.

Share buybacks are however likely to have provided a boost to the bottom line.

The Zacks Consensus Estimate for revenues is pegged at $1.4 billion, indicating a decline of 25.5% from the year-ago reported figure. The consensus mark for earnings per share is pegged at $5.24, suggesting a decline of 16.3% from the year-ago quarter reported figure.

Alliance Data Systems Corporation Price and EPS Surprise

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

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What Our Quantitative Model Predicts

Our proven model predicts 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.

Earnings ESP: Alliance Data has an Earnings ESP of +1.34%. This is because the Most Accurate Estimate of $5.31 is pegged higher than the Zacks Consensus Estimate of $5.24. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Alliance Data carries a Zacks Rank #3.    

Other Stocks to Consider    

Some stocks from the financial transaction service industry that have the perfect mix of elements to surpass estimates this time around are as follows:

Equifax EFX is set to report third-quarter earnings on Oct 23 and has an Earnings ESP of +1.08%. The company carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here..

FleetCor Technologies FLT has an Earnings ESP of +1.12% and a Zacks Rank #3. The company is slated to announce third-quarter earnings on Oct 29.

WEX WEX has an Earnings ESP of +1.24% and a Zacks Rank of 3. The company is set to report third-quarter results on Oct 30.

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Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.50% per year. So be sure to give these hand-picked 7 your immediate attention.

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Equifax, Inc. (EFX) : Free Stock Analysis Report
 
FleetCor Technologies, Inc. (FLT) : Free Stock Analysis Report
 
WEX Inc. (WEX) : Free Stock Analysis Report
 
Alliance Data Systems Corporation (ADS) : Free Stock Analysis Report
 
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Zacks Investment Research