Will Alliance Data (ADS) Miss This Earnings Season? - Analyst Blog

Alliance Data Systems Corporation ADS is set to report first-quarter 2014 results on April 17. Last quarter, the company had posted a surprise of 2.29%.  Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Alliance Data's inorganic story seems impressive. With solid financial strength and flexibility, we expect Alliance Data to pursue strategic acquisitions that would help it ramp up its growth profile.

The dotz coalition loyalty program in Brazil continued its national rollout. dotz now operates in 9 regional markets with more than 10 million collectors enrolled under the program. The company aims to enter four additional Brazilian markets by 2014.

Continued share buyback, resulting in lower share count will also aid the bottom line.

Earnings Whispers?

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

Zacks ESP:  ESP for Alliance Data is -0.77%. This is because the Most Accurate estimate stands at $2.57 and the Zacks Consensus Estimate stand at $2.59.

Zacks Rank: Alliance Data's Zacks Rank #2 (Buy) when combined with a negative earnings ESP makes surprise prediction difficult. We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is witnessing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

VeriFone Systems, Inc. PAY, earnings ESP of +4.76% and a Zacks Rank #3 (Hold).

The ADT Corporation ADT, earnings ESP of +4.55% and a Zacks Rank #3.

On Assignment Inc.  ASGN, earnings ESP of +7.69% and a Zacks Rank #3.