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Alliance Data (ADS) Q1 Earnings & Revenues Beat Estimates
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Alliance Data Systems Corporation’s operating earnings of $6.28 per share for the first quarter of 2021 beat the Zacks Consensus Estimate of $3.23. The bottom line increased more than eight-fold year over year.
The quarterly earnings benefited from lower expenses. Credit sales were better as a result of recovery of in-store sales performance, coupled with continued strength of digital spending. Application and new account growth rates improved as consumers were increasingly active in omnichannel shopping and engagement.
Shares of the company gained 3.4% in the pre-market trading session, reflecting the outperformance.
Alliance Data Systems Corporation Price, Consensus and EPS Surprise
Alliance Data reported total revenues of $1.1 billion, down 21% year over year, attributable to the continuing impacts of COVID-19. Both Card Services as well as LoyaltyOne segment generated lower revenues. The top line however beat the Zacks Consensus Estimate by 0.6%.
Operating expenses decreased 52.2% year over year to $581.8 million. Operating income increased more than three-fold year over year to $503.1 million largely due to lower expenses.
EBIT increased nearly sixteen-fold year over year to $394 million.
Segment Update
LoyaltyOne: Revenues totaled $177 million, down 11% year over year, attributable to fewer short-term loyalty programs in market due to the impact of COVID-19.
EBIT decreased 32% to $31.7 million, largely attributable to the lost margin from the decrease in revenues and the gain on the sale of Precima in January 2020.
AIR MILES reward miles issued decreased 16%, reflecting a decline in discretionary spending, including credit card spend. AIR MILES reward miles redeemed declined 26%, reflecting the impact of the pandemic on travel-related categories, offset in part by strength from merchandise redemptions.
BrandLoyalty revenues decreased 20% due to decline in programs as a result of retailer delays related to the continuing impact of COVID.
Card Services: Revenues were $908 million, down 23% year over year, attributable to decline in average receivables and in part from interest rate reductions in 2020. EBIT was $409.9 million, up nearly thirteen-fold year over year. attributable to a lower provision for loan loss.
Financial Update
As of Mar 31, 2021 cash and cash equivalents was $2.9 billion, down 7.2% from Dec 31, 2020-level.
At quarter end, the debt level was down 0.8% from 2020-end to $2.8 billion.
Cash from operations decreased 9.7% year over year to $517.2 million in the reported quarter. Capital expenditure at Alliance Data declined 22.3% year over year to $12.2 million in the same period.
Dividend Update
The board of directors approved a quarterly dividend of 21 cents to be paid out on Jun 18 to stockholders of record as of May 14.
Guidance
Alliance Data estimates credit sales to increase at a high single- to low-double-digit rate, with net loss rate below 6% in 2021 and in the mid-to-upper 5% range in the second quarter of 2021.
Credit card and loan receivables at 2021 end are projected to be in line with 2020 end levels, although average receivables are expected to be down mid-single-digits in 2021.
It projects high-single-digit to low-double-digit card receivables growth as it enters 2022.
Total revenues are estimated to be down low-single-digits as the impact from lower receivables will be partially offset by improving revenues from LoyaltyOne and the Bread acquisition.
Expenses are expected to remain flat with 2020 level. The company targets over $100 million of digital innovation and technology enhancement and $50 million in marketing investments in 2021 to support growth.
Mastercard’s (MA - Free Report) first-quarter 2021 earnings beat the Zacks Consensus Estimate.
Upcoming Releases
The Western Union Company (WU - Free Report) is set to release first-quarter 2021 earnings on May 4. The Zacks Consensus Estimate for the same stands at 45 cents per share.
Global Payments (GPN - Free Report) is set to release first-quarter 2021 earnings on May 4. The Zacks Consensus Estimate for the same stands at $1.77 per share.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Alliance Data (ADS) Q1 Earnings & Revenues Beat Estimates
Alliance Data Systems Corporation’s operating earnings of $6.28 per share for the first quarter of 2021 beat the Zacks Consensus Estimate of $3.23. The bottom line increased more than eight-fold year over year.
The quarterly earnings benefited from lower expenses. Credit sales were better as a result of recovery of in-store sales performance, coupled with continued strength of digital spending. Application and new account growth rates improved as consumers were increasingly active in omnichannel shopping and engagement.
Shares of the company gained 3.4% in the pre-market trading session, reflecting the outperformance.
Alliance Data Systems Corporation Price, Consensus and EPS Surprise
Alliance Data Systems Corporation price-consensus-eps-surprise-chart | Alliance Data Systems Corporation Quote
Behind the Headlines
Alliance Data reported total revenues of $1.1 billion, down 21% year over year, attributable to the continuing impacts of COVID-19. Both Card Services as well as LoyaltyOne segment generated lower revenues. The top line however beat the Zacks Consensus Estimate by 0.6%.
Operating expenses decreased 52.2% year over year to $581.8 million. Operating income increased more than three-fold year over year to $503.1 million largely due to lower expenses.
EBIT increased nearly sixteen-fold year over year to $394 million.
Segment Update
LoyaltyOne: Revenues totaled $177 million, down 11% year over year, attributable to fewer short-term loyalty programs in market due to the impact of COVID-19.
EBIT decreased 32% to $31.7 million, largely attributable to the lost margin from the decrease in revenues and the gain on the sale of Precima in January 2020.
AIR MILES reward miles issued decreased 16%, reflecting a decline in discretionary spending, including credit card spend. AIR MILES reward miles redeemed declined 26%, reflecting the impact of the pandemic on travel-related categories, offset in part by strength from merchandise redemptions.
BrandLoyalty revenues decreased 20% due to decline in programs as a result of retailer delays related to the continuing impact of COVID.
Card Services: Revenues were $908 million, down 23% year over year, attributable to decline in average receivables and in part from interest rate reductions in 2020. EBIT was $409.9 million, up nearly thirteen-fold year over year. attributable to a lower provision for loan loss.
Financial Update
As of Mar 31, 2021 cash and cash equivalents was $2.9 billion, down 7.2% from Dec 31, 2020-level.
At quarter end, the debt level was down 0.8% from 2020-end to $2.8 billion.
Cash from operations decreased 9.7% year over year to $517.2 million in the reported quarter. Capital expenditure at Alliance Data declined 22.3% year over year to $12.2 million in the same period.
Dividend Update
The board of directors approved a quarterly dividend of 21 cents to be paid out on Jun 18 to stockholders of record as of May 14.
Guidance
Alliance Data estimates credit sales to increase at a high single- to low-double-digit rate, with net loss rate below 6% in 2021 and in the mid-to-upper 5% range in the second quarter of 2021.
Credit card and loan receivables at 2021 end are projected to be in line with 2020 end levels, although average receivables are expected to be down mid-single-digits in 2021.
It projects high-single-digit to low-double-digit card receivables growth as it enters 2022.
Total revenues are estimated to be down low-single-digits as the impact from lower receivables will be partially offset by improving revenues from LoyaltyOne and the Bread acquisition.
Expenses are expected to remain flat with 2020 level. The company targets over $100 million of digital innovation and technology enhancement and $50 million in marketing investments in 2021 to support growth.
Zacks Rank
Alliance Data currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Another Player From the Industry
Mastercard’s (MA - Free Report) first-quarter 2021 earnings beat the Zacks Consensus Estimate.
Upcoming Releases
The Western Union Company (WU - Free Report) is set to release first-quarter 2021 earnings on May 4. The Zacks Consensus Estimate for the same stands at 45 cents per share.
Global Payments (GPN - Free Report) is set to release first-quarter 2021 earnings on May 4. The Zacks Consensus Estimate for the same stands at $1.77 per share.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>