Alliance Data Systems Corporation (NYSE: ADS) and Willdan Group (NASDAQ:WLDN) are both business services companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, dividends, profitability and risk.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Alliance Data Systems Corporation and Willdan Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alliance Data Systems Corporation 3 7 8 0 2.28
Willdan Group 0 0 3 0 3.00

Alliance Data Systems Corporation currently has a consensus target price of $252.33, suggesting a potential upside of 14.62%. Willdan Group has a consensus target price of $37.67, suggesting a potential upside of 22.33%. Given Willdan Group’s stronger consensus rating and higher possible upside, analysts plainly believe Willdan Group is more favorable than Alliance Data Systems Corporation.

Dividends

Alliance Data Systems Corporation pays an annual dividend of $2.08 per share and has a dividend yield of 0.9%. Willdan Group does not pay a dividend. Alliance Data Systems Corporation pays out 23.7% of its earnings in the form of a dividend.

Institutional & Insider Ownership

96.0% of Alliance Data Systems Corporation shares are owned by institutional investors. Comparatively, 57.2% of Willdan Group shares are owned by institutional investors. 2.6% of Alliance Data Systems Corporation shares are owned by company insiders. Comparatively, 13.3% of Willdan Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Alliance Data Systems Corporation has a beta of 1.75, suggesting that its stock price is 75% more volatile than the S&P 500. Comparatively, Willdan Group has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500.

Earnings & Valuation

This table compares Alliance Data Systems Corporation and Willdan Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Alliance Data Systems Corporation $7.41 billion 1.65 $1.47 billion $8.78 25.07
Willdan Group $256.27 million 1.04 $15.86 million $1.12 27.49

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

Profitability

This table compares Alliance Data Systems Corporation and Willdan Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alliance Data Systems Corporation 6.77% 59.67% 3.74%
Willdan Group 3.90% 18.91% 8.82%

Summary

Alliance Data Systems Corporation beats Willdan Group on 10 of the 16 factors compared between the two stocks.

About Alliance Data Systems Corporation

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.

About Willdan Group

Willdan Group, Inc. is a holding company. The Company provides professional technical and consulting services to utilities, private industry and public agencies at all levels of government, primarily in California and New York. It operates through four segments: Energy Efficiency Services, Engineering Services, Public Finance Services and Homeland Security Services. The Energy Efficiency Services segment provides energy efficiency consulting services to utilities, state agencies, municipalities, private industry and non-profit organizations. The Engineering Services segment offers a range of engineering and planning services to its public and private sector clients. The Public Finance Services segment provides support for the various financing techniques employed by public agencies to finance their operations and infrastructure. The Homeland Security Services segment provides national preparedness, homeland security consulting, public safety and emergency response services.

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