Alliance Data Systems (ADS) reported monthly data for March; charge-offs and loan growth were modestly better than our expectations, and delinquencies were consistent with historical seasonal trends. In March, net charge-offs for the managed portfolio rose 10 basis points month-to-month, to 4.7%, and 30-day-plus delinquencies fell 40 basis points month-to-month, to 3.9%. For the March quarter, net charge-offs were 4.8%.

ADS brings a unique proposition to the market by marrying digital marketing skills with credit and loyalty products. The company has a clear advantage over its major bank-like private-label competition, which is weak in data analytics and marketing skills; this suggests a premium valuation.

During its September 2013 quarterly earnings conference call, management expanded its target private-label market to $25 billion-$30 billion (up from $20 billion), as ADS expands into new verticals. Over the long term, management targets revenues to grow at a rate of 3 times GDP, which should drive about 10% EBITDA growth and 15% EPS growth. ADS shares trade at 17.9 times  2015 economic EPS estimate.