Global Payments (NYSE:GPN) and Alliance Data Systems (NYSE:ADS) are both business services companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, risk and profitability.
Valuation & Earnings
This table compares Global Payments and Alliance Data Systems' revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Global Payments | $4.91 billion | 13.08 | $430.61 million | $5.86 | 37.17 |
Alliance Data Systems | $5.58 billion | 0.98 | $278 million | $16.39 | 6.70 |
Global Payments has higher earnings, but lower revenue than Alliance Data Systems. Alliance Data Systems is trading at a lower price-to-earnings ratio than Global Payments, indicating that it is currently the more affordable of the two stocks.
Dividends
Global Payments pays an annual dividend of $0.78 per share and has a dividend yield of 0.4%. Alliance Data Systems pays an annual dividend of $0.84 per share and has a dividend yield of 0.8%. Global Payments pays out 13.3% of its earnings in the form of a dividend. Alliance Data Systems pays out 5.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Global Payments has raised its dividend for 1 consecutive years and Alliance Data Systems has raised its dividend for 1 consecutive years. Alliance Data Systems is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Ratings
This is a summary of recent recommendations for Global Payments and Alliance Data Systems, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Global Payments | 0 | 4 | 25 | 0 | 2.86 |
Alliance Data Systems | 1 | 6 | 9 | 0 | 2.50 |
Global Payments presently has a consensus target price of $211.2143, suggesting a potential downside of 3.02%. Alliance Data Systems has a consensus target price of $146.2667, suggesting a potential upside of 33.24%. Given Alliance Data Systems' higher probable upside, analysts plainly believe Alliance Data Systems is more favorable than Global Payments.
Profitability
This table compares Global Payments and Alliance Data Systems' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Global Payments | 6.75% | 6.46% | 4.06% |
Alliance Data Systems | 6.82% | 36.63% | 1.99% |
Insider and Institutional Ownership
86.7% of Global Payments shares are held by institutional investors. Comparatively, 79.4% of Alliance Data Systems shares are held by institutional investors. 0.9% of Global Payments shares are held by company insiders. Comparatively, 2.1% of Alliance Data Systems shares are held 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.
Volatility & Risk
Global Payments has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500. Comparatively, Alliance Data Systems has a beta of 2.58, meaning that its share price is 158% more volatile than the S&P 500.
Summary
Alliance Data Systems beats Global Payments on 9 of the 16 factors compared between the two stocks.