Alliance Data Systems Corporation (NYSE: ADS) and Checkpoint Systems (NYSE:CKP) are both business services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, profitability, earnings and risk.

Dividends

Alliance Data Systems Corporation pays an annual dividend of $2.08 per share and has a dividend yield of 1.0%. Checkpoint Systems does not pay a dividend. Alliance Data Systems Corporation pays out 23.7% of its earnings in the form of a dividend.

Institutional and Insider Ownership

96.1% of Alliance Data Systems Corporation shares are owned by institutional investors. 2.6% of Alliance Data Systems Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Alliance Data Systems Corporation and Checkpoint Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alliance Data Systems Corporation 6.77% 59.67% 3.74%
Checkpoint Systems -27.26% -50.16% -20.24%

Earnings and Valuation

This table compares Alliance Data Systems Corporation and Checkpoint Systems’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Alliance Data Systems Corporation $7.41 billion 1.62 $1.47 billion $8.78 24.60
Checkpoint Systems N/A N/A N/A N/A N/A

Alliance Data Systems Corporation has higher revenue and earnings than Checkpoint Systems.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Alliance Data Systems Corporation and Checkpoint Systems, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alliance Data Systems Corporation 3 7 10 0 2.35
Checkpoint Systems 0 0 0 0 N/A

Alliance Data Systems Corporation currently has a consensus target price of $253.44, indicating a potential upside of 17.33%. Given Alliance Data Systems Corporation’s higher possible upside, equities analysts plainly believe Alliance Data Systems Corporation is more favorable than Checkpoint Systems.

Summary

Alliance Data Systems Corporation beats Checkpoint Systems on 9 of the 10 factors compared between the two stocks.

About Alliance Data Systems Corporation

Alliance Data Systems Corporation is a provider of data-driven marketing and loyalty solutions serving consumer-based businesses in a range of industries. The Company offers a portfolio of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, end-to-end marketing services, analytics and creative services, direct marketing services, and private label and co-brand retail credit card programs. The Company operates through three segments: LoyaltyOne, which provides coalition and short-term loyalty programs through the Company’s Canadian AIR MILES Reward Program and BrandLoyalty Group B.V. (BrandLoyalty); Epsilon, which provides end-to-end, integrated direct marketing solutions, and Card Services, which provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services for the Company’s private label and co-brand retail credit card programs.

About Checkpoint Systems

Checkpoint Systems, Inc. is a United States-based supplier of merchandise availability solutions for the retail industry. The Company provides end-to-end solutions enabling retailers to achieve real-time inventory, accelerate the replenishment cycle, prevent out-of-stocks and reduce theft. It offers merchandise availability solutions, such as shrink management, including antennas, labels and tags, source tagging, deactivation, remote service and support, and Alpha High Theft Solutions, and merchandise visibility solutions, including inventory management, asset tracking and OneTag Program. OneTag Program allows retailers to obtain the benefits of inventory visibility and loss prevention with a single radio frequency identification tag. It offers apparel labelling solutions, such as Trim, including woven labels, printed fabric labels and specialty trim services, and brand merchandising, including printed items and self-adhesive. It serves markets, such as electronics and grocery.

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