Alliance Data Systems Beats on Both Top and Bottom Lines

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Alliance Data Systems (NYS: ADS) reported earnings yesterday. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Alliance Data Systems beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share grew significantly.


Gross margins dropped, operating margins shrank, and net margins grew.

Revenue details
Alliance Data Systems notched revenue of $891.6 million. The 19 analysts polled by S&P Capital IQ foresaw revenue of $832.2 million on the same basis. GAAP reported sales were 20% higher than the prior-year quarter's $740.4 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $2.38. The 20 earnings estimates compiled by S&P Capital IQ averaged $2.19 per share on the same basis. GAAP EPS of $1.86 for Q1 were 19% higher than the prior-year quarter's $1.56 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 32.7%, 350 basis points worse than the prior-year quarter. Operating margin was 28.3%, 30 basis points worse than the prior-year quarter. Net margin was 12.9%, 120 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $830.7 million. On the bottom line, the average EPS estimate is $2.00.

Next year's average estimate for revenue is $3.51 billion. The average EPS estimate is $8.56.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 195 members rating the stock outperform, and 37 members rating it underperform. Among 65 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 58 give Alliance Data Systems a green thumbs-up, and seven give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Alliance Data Systems is outperform, with an average price target of $125.67.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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