Fidelity National Information Servcs (NYSE:FIS) and Alliance Data Systems (NYSE:ADS) are both business services companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, institutional ownership, risk, dividends, earnings, profitability and analyst recommendations.
Institutional & Insider Ownership
90.2% of Fidelity National Information Servcs shares are held by institutional investors. Comparatively, 93.9% of Alliance Data Systems shares are held by institutional investors. 0.7% of Fidelity National Information Servcs shares are held by insiders. Comparatively, 2.1% of Alliance Data Systems shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Risk & Volatility
Fidelity National Information Servcs has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500. Comparatively, Alliance Data Systems has a beta of 2.54, indicating that its stock price is 154% more volatile than the S&P 500.
Dividends
Fidelity National Information Servcs pays an annual dividend of $1.40 per share and has a dividend yield of 1.0%. Alliance Data Systems pays an annual dividend of $0.84 per share and has a dividend yield of 2.0%. Fidelity National Information Servcs pays out 25.0% 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. Fidelity National Information Servcs has raised its dividend for 3 consecutive years and Alliance Data Systems has raised its dividend for 3 consecutive years. Alliance Data Systems is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Recommendations
This is a summary of recent recommendations for Fidelity National Information Servcs and Alliance Data Systems, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Fidelity National Information Servcs | 0 | 4 | 20 | 1 | 2.88 |
| Alliance Data Systems | 1 | 9 | 7 | 0 | 2.35 |
Fidelity National Information Servcs presently has a consensus price target of $154.5217, indicating a potential upside of 13.79%. Alliance Data Systems has a consensus price target of $88.4286, indicating a potential upside of 112.98%. Given Alliance Data Systems' higher possible upside, analysts clearly believe Alliance Data Systems is more favorable than Fidelity National Information Servcs.
Profitability
This table compares Fidelity National Information Servcs and Alliance Data Systems' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Fidelity National Information Servcs | 1.45% | 7.89% | 4.40% |
| Alliance Data Systems | 3.41% | 40.98% | 2.48% |
Valuation and Earnings
This table compares Fidelity National Information Servcs and Alliance Data Systems' gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Fidelity National Information Servcs | $10.33 billion | 8.12 | $298 million | $5.61 | 24.20 |
| Alliance Data Systems | $5.58 billion | 0.35 | $278 million | $16.39 | 2.53 |
Fidelity National Information Servcs has higher revenue and earnings than Alliance Data Systems. Alliance Data Systems is trading at a lower price-to-earnings ratio than Fidelity National Information Servcs, indicating that it is currently the more affordable of the two stocks.
Summary
Alliance Data Systems beats Fidelity National Information Servcs on 9 of the 17 factors compared between the two stocks.
