Quite a lousy day in the market today! Could feel it yesterday when the Dow sold off and today it followed through with continued selling. Even so, market has had a big run and needs a rest....wish it wasn't so!
Now that my day is done, I have a chance to run through the lists of stocks and see if anything looks nice for our pick list. I came across Alliance Data Systems which I think fits the bill (ADS). Alliance, according to CNN.money "...provides electronic transaction services, credit services and loyalty and database marketing services. The Company develops and executes programs designed to help its clients target, acquire & retain loyal customers."
ADS had a nice day today closing at $28.45 up $1.05 on the day or 3.83%. They reported their earnings on July 16, 2003, for the quarter ending June 30, 2003. At the same time, according to NYTimes on the web, they "...raised guidance for the full year."
By the way, I do not own any shares of this nor do any members of my family!
According to the NYTimes article, total second quarter revenue increased 20% to $247.6 million compared to $205.5 million in the same period a year ago. Net income increased 250% to $11.9 million or $.15/share compared to $3.4 million or $.04/share for second quarter of 2002.
The morningstar.com 5 year financial graph is equally impressive. Revenues have grown sequentially from $411 million in 1998, to $583 million in 1999, $678 million in 2000, $777 million in 2001, $871 million in 2002...and extrapolating the current quarter we should get near $1 billion for 2003.
Free cash flow has been improving from $54 million in 2000, $132 million in 2001, $85 million in 2002, and $206 million in the trailing twelve months.
Financial balance sheet not quite as pretty as the previous facts: $99.7 million in cash, $358.7 million in current assets and $492.2 million in current liabilities and $503.0 million in long-term liabilities. Morningstar.com reports $1.09 billion in long-term aseets. Lots of debt apparently but the cash flow is good and improving, so this hopefully shouldn't be a problem.
Yahoo.com shows a market cap of $2.16 Billion with 78.7 million shares outstanding and 62.2 million that float. The p/e is a steep 49.73 and there are only 966,000 shares out short representing 2.97 days of average volume.
The stock looks nice to me although debt is a bit steep imho, and the p/e is a bit rich. Otherwise the revenue growth and the latest earnings picture as well as the free cash flow generated is all attractive. May be worth your consideration and further investigation!
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