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What's in the Cards for Alliance Data (ADS) Q1 Earnings?

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Alliance Data Systems Corporation (ADS - Free Report) is scheduled to report first-quarter 2020 results on Apr 23.

Notably, the Zacks Consensus Estimate for first-quarter revenues is pegged at $1.3 billion, which indicates an improvement of 0.7% from the year-ago quarter. Further, the Zacks Consensus Estimate for earnings per share stands at $4.87 per share, suggesting growth of 30.9% from the prior-year reported figure.

Factors at Play

Alliance Data’s first-quarter performance is likely to have benefited from several initiatives undertaken at its Card Services segment. Accounting for significant part of the company’s revenues in 2019, this segment is expected have gained from numerous investments and cost reduction initiatives. In fact, these highlight the company’s commitment to enhance the segment’s offerings. Loss ratios are likely to decline in the to-be-reported quarter.

Evidently, the Zacks Consensus Estimate for first-quarter average receivables is pegged at $18.4 billion, suggesting an improvement of 9.4% from the year-ago quarter’s reported number. The consensus estimates for Card Services segment revenues stands at $1.2 billion, indicating growth of 3.1% from the prior-year reported figure.

The Zacks Consensus Estimate for first-quarter EBITDA at the Card Services segment is pegged at $314 million, indicating an improvement of 6.4% from the year-ago quarter. The company’s first-quarter results are likely to reflect its cost cutting initiatives.

However, Alliance Data’s divestment of Precima (which contributed a significant portion to this segment’s top-line growth) in January of this year and costs associated with it is likely to have impacted the LoyaltyOne segment. The Zacks Consensus Estimate for first-quarter revenues at this segment is $195 million, indicating a decline of 4.4% from prior-year quarter. Also, the consensus estimates for EBITDA stands at $37.5 million, indicating a fall of 31.8% from the year-ago reported number.

Nevertheless, the company’s continued share buyback activity is likely to get reflected in the first-quarter results.

Earnings Surprise History

The company has a trailing four-quarter negative earnings surprise of 4.95%, on average.

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 +3.14%. This is because the Most Accurate Estimate of $5.17 is pegged higher than the Zacks Consensus Estimate of $5.02. 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 #4 (Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

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

Advanced Disposal Services, Inc. (ADSW - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #3.

ICF International, Inc. (ICFI - Free Report)   has an Earnings ESP of +3.08% and a Zacks #3.

Verisk Analytics, Inc. (VRSK - Free Report) has an Earnings ESP of +2.43 % and a Zacks Rank of 3.

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