Alliance Data Systems Beats on Both Top and Bottom Lines

Seth Jayson, The Motley Fool
Updated

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 thisarticle 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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