Can Card Receivables Aid Alliance Data's (ADS) Q3 Earnings?
Zacks Investment Research | Oct 16, 2017 09:52PM ET
Alliance Data Systems Corporation (NYSE:ADS) is set to report third-quarter 2017 results on Oct 19, before the market opens. Improving performances across all its segments are likely to drive the company’s bottom line.
Card Receivables, accounting for more than 50% of the company’s revenues, will continue to generate higher yields as Alliance Data has been rapidly growing its private label card portfolio with a number of wins from both the new and existing clients. The Zacks Consensus Estimate for Card Receivables revenues are currently pegged at $1.1 billion, improving 11.8%, while EBITDA is estimated at $440 million, up nearly 33%. Average receivables are estimated at $16.2 billion, increasing 15.7% year over year.
The company continues to witness growth in auto, CRM and data supporting Epsilon segments. The Zacks Consensus Estimate for Epsilon revenues is expected to increase 6.1% year over year to $576 million.
An anticipated 28% lower AIR MILES reward miles redeemed will probably weigh on the AIR MILES revenue in the soon-to-be reported quarter.
Share repurchases must have lent additional support to the bottom line. The Zacks Consensus Estimate for earnings of $5.04 per share reflects a 6.2% year-over-year increase.
However, the company reported delinquency rates, having deteriorated 40 basis points year over year to 5.4% as of Sep 30, 2017.
What our Quantitative Model Predicts
Our proven model does not conclusively show that Alliance Data is likely to beat estimates this quarter. This is because a stock needs to have the right combination of two main ingredients — a positive Zacks Investment Research
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