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

Dividends

Alliance Data Systems Corporation pays an annual dividend of $2.08 per share and has a dividend yield of 1.0%. Atento does not pay a dividend. Alliance Data Systems Corporation pays out 23.7% of its earnings in the form of a dividend.

Insider and Institutional Ownership

95.7% of Atento shares are held by institutional investors. Comparatively, 96.0% of Alliance Data Systems Corporation shares are held by institutional investors. 2.6% of Alliance Data Systems Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Atento and Alliance Data Systems Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Atento $1.83 billion 0.48 $196.76 million $0.25 47.80
Alliance Data Systems Corporation $7.41 billion 1.58 $1.47 billion $8.78 23.97

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

Analyst Ratings

This is a summary of current ratings and price targets for Atento and Alliance Data Systems Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Atento 0 1 2 0 2.67
Alliance Data Systems Corporation 3 7 10 0 2.35

Atento currently has a consensus target price of $14.50, suggesting a potential upside of 21.34%. Alliance Data Systems Corporation has a consensus target price of $253.44, suggesting a potential upside of 20.44%. Given Atento’s stronger consensus rating and higher possible upside, equities analysts plainly believe Atento is more favorable than Alliance Data Systems Corporation.

Risk and Volatility

Atento has a beta of 0.04, meaning that its stock price is 96% less volatile than the S&P 500. Comparatively, Alliance Data Systems Corporation has a beta of 1.76, meaning that its stock price is 76% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Atento 0.99% 11.96% 3.58%
Alliance Data Systems Corporation 6.77% 59.67% 3.74%

Summary

Alliance Data Systems Corporation beats Atento on 12 of the 16 factors compared between the two stocks.

About Atento

Atento S.A. is a provider of customer-relationship management and business-process outsourcing (CRM BPO) services and solutions in Latin America. The Company offers a portfolio of CRM BPO services, including customer care, sales, collections, back office and technical support. The Company operates through three segments: EMEA, Americas and Brazil. Its services and solutions are delivered across multiple channels including digital (short message service (SMS), e-mail, chats, social media and applications, among others) and voice, and are enabled by process design, technology and intelligence functions. The Company also has client relationships across a range of industries working in sectors, such as telecommunications, banking and financial services and multi-sector, which comprise the consumer goods, services, public administration, pay television, healthcare, transportation, technology and media industries.

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.

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