Benzinga | Jan 27, 2021 10:06AM EST

A Preview Of Alliance Data Systems's Earnings

On Thursday, January 28, Alliance Data Systems (NYSE:ADS) will release its latest earnings report. Check out Benzinga's preview to understand the implications.

Net Income, Earnings, And Earnings Per Share

Earnings and especially earnings per share (EPS) are useful measures of a company's profitability. Total earnings, which is also referred to as net income, equals total revenue minus total expenses. EPS equals to net income divided by the number of shares outstanding.

Earnings And Revenue

Analysts predict Alliance Data Systems will report earnings of $2.41 per share on revenue of $1.11 billion. In the same quarter last year, Alliance Data Systems reported earnings per share of $4.12 on sales of $1.46 billion.

What Are Analyst Estimates And Earnings Surprises, And Why Do They Matter?

Wall Street analysts who study this company will publish analyst estimates of revenue and EPS. The averages of all analyst EPS and revenue estimates are called the "consensus estimates"; these consensus estimates can have a significant effect on a company's performance during an earnings release. When a company posts earnings or revenue above or below a consensus estimate, it has posted an "earnings surprise", which can really move a stock depending on the difference between actual and estimated values.

The Wall Street estimate would represent a 41.5% decline in the company's earnings. Sales would be down 24.02% on a year-over-year basis. Here is how the company's reported EPS has stacked up against analyst estimates in the past:

Quarter Q3 2020 Q2 2020 Q1 2020 Q4 2020EPS Estimate 2.20 1.03 2.78 4.37EPS Actual 3.45 1.86 0.75 4.12Revenue Estimate 1.01 B 1.15 B 1.28 B 1.50 BRevenue Actual 1.05 B 979.30 M 1.38 B 1.46 B

Stock Performance

Shares of Alliance Data Systems were trading at $68.6 as of January 26. Over the last 52-week period, shares are down 38.29%. Given that these returns are generally negative, long-term shareholders are likely a little upset going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Alliance Data Systems is scheduled to hold the call at 08:30:00 ET and can be accessed here.