Alliance Data Systems Corporation (ADS) is set to report third-quarter 2014 results on Oct 16. Last quarter, the company posted a 1.65% positive earnings surprise. Let’s see how things are shaping up for this announcement.
Factors Influencing This Past Quarter
Increasing expenses owing to higher cost of operations and general and administrative expenses might weigh on margin expansion of Alliance Data.
In the event of actual redemptions by AIR MILES Reward Program being more than expected, or if there is an increase in costs related to redemption of AIR MILES reward miles, profitability will likely be affected. The company projects AIR MILES redeemed for the remainder of 2014 to remain high.
However, strategic acquisitions continue to drive it growth profile. The latest buyout of Conversant, Inc. (CNVR), a leading digital marketing company, bears testimony to its effort to ramp up its growth profile. In addition, the dotz coalition loyalty program in Brazil also remains well placed.
Earnings Whispers
Our proven model does not conclusively show that Alliance Data is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Alliance Data has -0.64% earnings ESP. This is because the Most Accurate Estimate stands at $3.10 while the Zacks Consensus Estimate stand at $3.12.
Zacks Rank: Alliance Data’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, when combined with a negative 0.64% earnings ESP, surprise prediction becomes difficult.
Stocks to Consider
Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
Omnicom Group Inc. (OMC), earnings ESP of +1.10% and a Zacks Rank #1 (Strong Buy).
The Interpublic Group of Companies Inc. (IPG), earnings ESP of +4.76% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment