The Advisory Board (ABCO) versus Alliance Data Systems (ADS) Head to Head Comparison

The Advisory Board (NASDAQ: ABCO) and Alliance Data Systems (NYSE:ADS) are both mid-cap industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, institutional ownership, dividends and profitability.

Profitability

This table compares The Advisory Board and Alliance Data Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Advisory Board -3.42% 0.48% -1.23%
Alliance Data Systems 7.09% 62.95% 3.66%

Dividends

Alliance Data Systems pays an annual dividend of $2.08 per share and has a dividend yield of 0.8%. The Advisory Board does not pay a dividend. Alliance Data Systems pays out 22.1% of its earnings in the form of a dividend.

Insider & Institutional Ownership

95.5% of The Advisory Board shares are held by institutional investors. Comparatively, 94.6% of Alliance Data Systems shares are held by institutional investors. 4.7% of The Advisory Board shares are held by insiders. Comparatively, 2.6% of Alliance Data Systems shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility & Risk

The Advisory Board has a beta of 1.34, suggesting that its share price is 34% more volatile than the S&P 500. Comparatively, Alliance Data Systems has a beta of 1.79, suggesting that its share price is 79% more volatile than the S&P 500.

Earnings & Valuation

This table compares The Advisory Board and Alliance Data Systems’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
The Advisory Board $803.42 million 2.73 $91.23 million $1.74 30.94
Alliance Data Systems $7.14 billion 2.03 $432.30 million $9.43 27.76

Alliance Data Systems has higher revenue and earnings than The Advisory Board. Alliance Data Systems is trading at a lower price-to-earnings ratio than The Advisory Board, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations for The Advisory Board and Alliance Data Systems, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Advisory Board 0 11 3 0 2.21
Alliance Data Systems 3 7 9 0 2.32

The Advisory Board currently has a consensus target price of $51.44, suggesting a potential downside of 4.44%. Alliance Data Systems has a consensus target price of $271.81, suggesting a potential upside of 3.82%. Given Alliance Data Systems’ stronger consensus rating and higher probable upside, analysts clearly believe Alliance Data Systems is more favorable than The Advisory Board.

Summary

Alliance Data Systems beats The Advisory Board on 11 of the 16 factors compared between the two stocks.

About The Advisory Board

The Advisory Board Company is a provider of software and solutions to the healthcare and higher education industries. The Company offers subscription-based membership programs, software and data-enabled services. All of its programs are rooted in best practices and extends across four areas, including Best practices research, Technology, Data-enabled services and Consulting services. The best practices research and insight programs provide the foundation for all of its other programs. The Company offers technology analytics programs anchored by cloud-based software applications that surface performance improvement opportunities to accelerate progress. Through its consulting services, the Company provides on-the-ground support for performance improvement initiatives, as well as best practice professional management of areas of the hospital or medical group. The Company’s data-enabled services are primarily focused in the area of enrollment management.

About Alliance Data Systems

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.

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