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Saturday, October 31, 2020

Is Now the Time to Invest in Alliance Data Systems Corporation (NYSE:ADS)?

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Alliance Data Systems Corporation (ADS) shares are trading at lower $42.00 and the avg recommendation for the stock is Moderate Buy, while the current analyst price target stands at $63.33.

To add more color to this target, the company’s high over the last year is $130.90 and the low is $20.51. Over the last 52 weeks, ADS is down -67.13% while the S&P 500 is up 10.68%. The catalyst for this interesting swing was the company’s recent earnings report.

A Notable Earnings Report

In the last quarter, ADS reported a profit of $486.5 million. Alliance Data Systems Corporation also saw revenues increase to $979.3 million. In addition, ADS has free cash flow of $1.04 billion as of 06-2020. The company’s EBITDA came in at $224.8 million which compares well with its peers.

ADS booked profit margins of 1.10%, its Return on Equity (ROE) is 4.20%, and its Return on Assets is 0.20%. All told, it is clear that, ADS needs to be on your watchlist.

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Of course, we must look beyond the financials and question how well those numbers represent the sustainable earnings power of the business. Investors need to know how sustainable this current run. ADS has a short ratio of 1.50 and outstanding shares of 47.60M.

Company Outlook

ADS has seen increased volume after this news and investors are putting their support behind the value proposition. Traders will also note the company’s earnings per share came in at 6.01. Alliance Data Systems Corporation ADS also noted assets of $22.87 billion at the end of the last quarter. Investors should also keep an eye on sector updates as ADS has historically followed its peers on positive news.

All told, Alliance Data Systems Corporation ADS has strung together solid data and demonstrated underlying fundamentals. At its current valuation, ADS represents an interesting risk/reward case. Traders should stay tuned to see if this recent report will push the stock to test recent resistance levels.

Alliance Data Systems Corporation ADS is now commanding a market cap of 2.02B and a float of 46.18M. ADS is increasing its credibility in this sector and that could lead to more upside down the line. Sign-up for continuing coverage on shares of ADS stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in ADS, either long or short, and we have not been compensated for this article.

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