Alliance Data Systems Earnings: Here’s Why the Stock is Up Now

Alliance Data Systems Corporation (NYSE:ADS) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are up 0.17%.

Alliance Data Systems Corporation Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 13.15% to $2.41 in the quarter versus EPS of $2.13 in the year-earlier quarter.

Revenue: Rose 18.65% to $1.03 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Alliance Data Systems Corporation reported adjusted EPS income of $2.41 per share. By that measure, the company beat the mean analyst estimate of $2.29. It missed the average revenue estimate of $1.03 billion.

Quoting Management: Ed Heffernan, president and chief executive officer, commented, “It was another outstanding quarter for Alliance Data as revenue and core earnings increased 19 percent and 21 percent, respectively. Importantly, organic revenue growth was approximately 7 percent, consistent with our long-term objective. Core EPS increased a strong 13 percent, despite a 7 percent increase in diluted shares outstanding. Thankfully, we are finally at the high-water mark for our share count. Starting in the third quarter of 2013, and continuing through the second quarter of 2014, we should benefit from a declining share count as our convertible notes mature, and the related ‘phantom shares’ vanish.”

Key Stats (on next page)…

Revenue decreased 2.41% from $1.05 billion in the previous quarter. EPS decreased 5.49% from $2.55 in the previous quarter.

Looking Forward: Analysts have a neutral outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings is a profit of $2.72 and has not changed. For the current year, the average estimate has moved up from a profit of $9.91 to a profit of $9.92 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)

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