Zacks_Analysts' Blog : Alliance Data Signs Deal - Analyst Blog

The Canadian coalition loyalty business of Alliance Data Systems Corporation (ADS) has made an agreement with The Children's Place Retail Stores Inc. (PLCE) whereby the latter will participate as a national sponsor in the Canadian AIR MILES Reward Program and issue reward miles across Canada.

Earlier, The Children's Place initiated a seven-month AIR MILES project in Alberta and British Columbia. Based on the successful initiative in its 27 western-Canadian stores, The Children's Place will now offer AIR MILES reward miles at more than 100 stores in nine Provinces effective April 1, 2011, including British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island.

AIR MILES reward miles issued during the fourth quarter of 2010 declined 1% year over year, largely attributable to reduced promotional activity in the grocer sector, and generally flat consumer credit card spending. However, AIR MILES reward miles issued during December 2010 increased 6% year over year, as spending accelerated in Canada.

Alliance Data reported adjusted earnings of $1.56 per share for fourth-quarter 2010, beating the Zacks Consensus estimate by 25 cents.

During the earnings conference call, Alliance Data guided single-digit growth in revenues and core earnings of $1.65 per share for first quarter 2011. The Zacks Consensus Estimate for first-quarter 2011 is $1.52 per share.

The company also projected revenues of $3.0 billion and adjusted earnings of $6.75 per share for 2011. The Zacks Consensus Estimate 2011 is $6.24 per share.

The company remains poised to fare well in the upcoming quarters based on continued strong performance across the segment, solid financial position and focus on boosting shareholder value. However, an increasing debt level makes us cautious.

The quantitative Zacks #3 Rank (short-term Hold rating) for Alliance Data indicates no clear directional pressure on the stock over the near term.

Headquartered in Dallas, Texas, Alliance Data Systems Corporation, together with its subsidiaries, provides data-driven and transaction-based marketing and customer loyalty solutions primarily in the United States and Canada. It competes with Discover Financial Services (DFS).