Back to top

Image: Bigstock

Alliance Data (ADS) to Report Q4 Earnings: What's in Store?

Read MoreHide Full Article

Alliance Data Systems Corporation is slated to report fourth-quarter 2020 results on Jan 28, before the opening bell. The company delivered an earnings surprise in two of the three reported quarters of 2020.

Factors to Consider

Reduction in credit receivables and lower card yields are likely to have impacted the Card Services segment’s fourth-quarter performance though reopening of the economy leading to stores reopening and seasonality provided some respite. Notably, this segment generally accounts for a massive chunk of the company’s top-line growth. Evidently, the Zacks Consensus Estimate for fourth-quarter average receivables is $16.1 billion, indicating a decline of 11.1% from the year-ago reported figure.

The Zacks Consensus Estimate for revenues at the Card Services segment is pegged at $898 million, indicating a decline of 20.4% from the prior-year quarter. The consensus estimate for EBITDA at this segment stands at $146 million, suggesting a fall of 30.5% from the year-ago quarter.

Lower travel-related redemptions given the pandemic are likely to have weighed on the LoyaltyOne segment. The Zacks Consensus Estimate for fourth-quarter revenues at this segment is $231 million, indicating a decline of 30.4% from prior-year quarter reported figure. Moreover, the consensus estimate for EBITDA stands at $57 million, indicating a decrease of 28.8% from the year-ago reported number.

Soft performance at both the segments is likely to have dented the company’s revenues in the to-be-reported quarter. The Zacks Consensus Estimate for third-quarter revenues stands at $1.1 billion, suggesting 23.5% fall from the year-earlier quarter's reported figure.

Further, expenses are likely to have increased attributable to substantial investments made in in data and analytics, and customer-facing digital capabilities. Nevertheless, several cost-cutting initiatives may have partially offset the same.

The Zacks Consensus Estimate for earnings per share is pegged at $2.48, indicating a decline 29.8% from the year-ago quarter.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict 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. But that’s not the case here.

Earnings ESP: Alliance Data has an Earnings ESP of -1.95%. This is because the Most Accurate Estimate of $2.44 is pegged lower than the Zacks Consensus Estimate of $2.48. 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.

Stocks to Consider

Some stocks worth considering from the business service sector with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:

Equifax (EFX - Free Report) has an Earnings ESP of +1.44% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Accenture (ACN - Free Report) has an Earnings ESP of +8.04% and a Zacks Rank #3.

Avis Budget Group (CAR - Free Report) has an Earnings ESP of +26.96% and a Zacks Rank of 2.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>





 


Unique Zacks Analysis of Your Chosen Ticker


Pick one free report - opportunity may be withdrawn at any time


Accenture PLC (ACN) - $25 value - yours FREE >>

Avis Budget Group, Inc. (CAR) - $25 value - yours FREE >>

Equifax, Inc. (EFX) - $25 value - yours FREE >>

Published in