Stock in the Spotlight: Alliance Data Systems Corporation (NYSE:ADS)

Alliance Data Systems Corporation (NYSE:ADS) reported earnings for the three months ended Mar2016 on April 21, 2016. The company earned $3.84 per share on revenue of $1.68B. Analysts had been modeling earning per share of $3.82 with $1.69B in revenue.

Revenue increased 5 percent to $1.68 billion while adjusted EBITDA, net increased 2 percent to $440 million for the first quarter of 2016. EPS increased 1 percent to $2.35 and core EPS increased 5 percent to $3.84 for the first quarter of 2016, compared to guidance of $3.83. Unfavorable foreign exchange rates reduced revenue and core EPS by approximately 2 percent compared to the first quarter of 2015.

Ed Heffernan, president and chief executive officer of Alliance Data, commented, “Consolidated results were consistent with guidance, which called for revenue and core EPS growth of 5 percent. Remember, the first quarter of 2016 is our toughest comparable of the year as both revenue and core EPS increased 30 percent in the first quarter of 2015.

“Entering 2016, the two biggest concerns raised by stockholders focused on the likelihood of higher loss rates at Card Services and worsening economic conditions in Canada. Ironically, both were favorable during the first quarter as loss rates came in slightly better than expected (5.2 percent actual vs. 5.3 percent guidance), and Canada produced its strongest results in quite some time (4 percent revenue growth, 11 percent adjusted EBITDA growth – both in constant currency – on 5 percent issuance growth). Conversely, these positives were offset by softer than expected results in the agency business at Epsilon and gross yield compression in Card Services as early stage delinquencies improved.”

Alliance Data Systems Corporation earnings per share showed an increasing trend of 12.5% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 1886%.Analysts project EPS growth over the next 5 years at 13.38%. It has EPS annual growth over the past 5 fiscal years of 20.3% when sales grew 18.2. It reported 4.7% sales growth, and 1.2% EPS growth in the last quarter.

The stock is trading at $222.19, up 25.79% from 52-week low of $176.63. The stock trades down -27.81% from its peak of $307.78 and 16.29% above the consensus price target of $258.38. Its volume clocked up at 1.1 million shares which is higher than the average volume of 0.83 million shares. Its market capitalization currently stands at $12.68B.