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Alliance Data (ADS) Q1 Earnings: Is a Surprise in Store?


Alliance Data Systems Corporation ADS is set to report first-quarter 2017 results on Apr 20, before the market opens. Last quarter, the company posted a positive earnings surprise of 0.91%. Let’s see how things are shaping up for this announcement.

Factors to Influence Q1 Results

Alliance Data’s first-quarter results are likely to improve on the back of better performance at Card Services segment owing to higher receivables. Average receivables improved 16% in the quarter.

Results at Epsilon segment are expected to have been favored by new contract wins as well as existing ones. Growth in auto, CRM, and data likely should also drive the upside.

BrandLoyalty performance has likely been driven by growth across Europe, Asia, U.S. as well as expansion efforts in Canada.

Share repurchases are likely to have boosted the bottom line.

In the first quarter, delinquency rates are expected to have improved about 50 basis points from the last year.

Expenses are likely to have increased, weighing on margin expansion.

Alliance Data Systems Corporation Price and EPS Surprise

Alliance Data Systems Corporation Price and EPS Surprise | Alliance Data Systems Corporation Quote

Earnings Whispers

Our proven model does not conclusively show that Alliance Data is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Alliance Data has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $3.65. 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 #3, which increases the predictive power of ESP. However, an Earnings ESP of 0.00% makes surprise prediction difficult.

Conversely, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies from the investment management industry that you may want to consider as these have the right combination of elements to post an earnings beat this quarter.

The Western Union Company WU, which is slated to report report-quarter earnings on May 2, has an Earnings ESP of +2.56% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Equifax Inc. EFX has an Earnings ESP of +0.71% and a Zacks Rank #3. The company is set to report first-quarter earnings on Apr 26.

RLI Corp RLI has an Earnings ESP of +4.17% and a Zacks Rank #3. The company is set to report fourth-quarter earnings on Apr 19.

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