Reviewing Alliance Data Systems (ADS) & National Research (NRCIA)

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

Valuation & Earnings

This table compares Alliance Data Systems and National Research’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alliance Data Systems $7.14 billion 2.14 $432.30 million $9.43 29.31
National Research $109.38 million 8.25 $20.51 million $0.50 73.70

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

Insider & Institutional Ownership

94.6% of Alliance Data Systems shares are held by institutional investors. Comparatively, 24.9% of National Research shares are held by institutional investors. 2.6% of Alliance Data Systems shares are held by insiders. Comparatively, 37.5% of National Research 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.

Dividends

Alliance Data Systems pays an annual dividend of $2.08 per share and has a dividend yield of 0.8%. National Research pays an annual dividend of $0.40 per share and has a dividend yield of 1.1%. Alliance Data Systems pays out 22.1% of its earnings in the form of a dividend. National Research pays out 80.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Alliance Data Systems and National Research, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alliance Data Systems 3 7 9 0 2.32
National Research 0 1 0 0 2.00

Alliance Data Systems currently has a consensus price target of $264.94, suggesting a potential downside of 4.14%. National Research has a consensus price target of $44.00, suggesting a potential upside of 19.40%. Given National Research’s higher possible upside, analysts plainly believe National Research is more favorable than Alliance Data Systems.

Volatility & Risk

Alliance Data Systems has a beta of 1.79, meaning that its share price is 79% more volatile than the S&P 500. Comparatively, National Research has a beta of 1.63, meaning that its share price is 63% more volatile than the S&P 500.

Profitability

This table compares Alliance Data Systems and National Research’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alliance Data Systems 7.09% 62.95% 3.66%
National Research 19.09% 30.84% 21.29%

Summary

Alliance Data Systems beats National Research on 9 of the 16 factors compared between the two stocks.

Alliance Data Systems Company Profile

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.

National Research Company Profile

National Research Corporation, doing business as NRC Health, is a provider of analytics and insights for healthcare providers, payers and other healthcare organizations. The Company operates through six segments: Experience, The Governance Institute, Market Insights, Transparency, National Research Corporation Canada and Connect. The Company’s portfolio of subscription-based solutions provides information and analysis to healthcare organizations and payers across a range of constituent-related elements, including patient experience and satisfaction, community population health risks, workforce engagement, community perceptions and physician engagement. NRC Health partners with clients across the range of healthcare services. The Company’s clients range from integrated health systems and post-acute providers, such as home health, long-term care and hospice, to payer organizations. NRC Health’s portfolio of solutions is designed to help healthcare companies.

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