Alliance Data Systems Corp (ADS) continues to trade near its recent all-time high in spite of the weak market. The bullish movement comes on rising estimates and another earnings surprise, providing more momentum for this Zacks #1 Rank stock.
Company Description
Alliance Data Systems Corp, together with its subsidiaries, provides data-driven and transaction-based marketing and customer loyalty programs in the United States and Canada. The company was founded in 1996 and has a market cap of $4.72 billion.
ADS has seen big gains in 2011, recently hitting a new all-time high in spite of the choppy market. That movement has been fueled by strong Q2 results from late July that came in ahead of expectations.
Second-Quarter Results
Revenue for the period was up 11% from last year to $740 million. Earnings also came in strong at $1.56, 2 cents ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 11% over the last four quarters.
The company’s largest segment, Private Label Services and Credit, saw modest gains, with sales up 2% to $351 million. Its Epsilon segment saw the biggest gain, with sales up 38% to $188 million.
Alliance is also working to expand its international presence, signing Banco do Brasil as a sponsor and acquiring a minority stake in a customer loyalty firm in India.
Estimates
We saw some decent movement in estimates off the good quarter, with the current year adding 9 cents to $6.73. The next-year estimate is pegged at $7.87, a bullish 17% growth projection.
Valuation
But in spite of the gains, the valuation picture still looks solid, with a PEG ratio of .82 below the benchmark of 1 for value.
12-Month Chart
On the chart, ADS is currently trading within 10% of its recent all-time high. Look for support from the long-term trend on any weakness.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Whisper Trader Service.
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