There’s a wonderful little Mexican restaurant near my house that serves great food, stays busy all day, yet still manages to provide timely service. Each time I go, I am told I will have to wait 15 minutes, but manage to find myself at a table in a fraction of the time. It keeps me coming back ’to the restaurant time and time again.

#-ad_banner-#​There’s a common saying in business: “under promise and over deliver.” The Mexican restaurant certainly understands the concept. It’s a good way to keep customers happy and enhance the business’ reputation.

In the stock market, though, promises and positivity are risky things to throw around. A disappointing quarter can hurt a stock after investors bail out of a seemingly inconsistent company.

That’s why I was surprised to find a company that hasn’t just raised expectations once, but twice this year. The stock is only up around 1% year-to-date leaving plenty of room for investors to hop aboard before it takes off.

The stock I’m talking about is Alliance Data Systems Corp. (NYSE: ADS). The company beat earnings for the last three quarters and raised forecast estimates for the second time this year. Earnings per share estimates were raised from $12.25 to $12.35 and estimates for full year revenue were raised from $5.25 billion to $5.3 billion. The revenue increase represents a year-over-year gain of 23%, or 9% organic growth.

Alliance Data operates in three main segments: a private-label credit-card service with customers like Victoria’s Secret and Pier 1; Epsilon, a marketing branch that helps companies increase sales through e-mail and other mediums; and LoyaltyOne, which specializes in various rewards programs.

The company reported growth in all three segments in its last quarterly report. LoyaltyOne led the growth with a 62% increase in revenue, while the private-label credit services and Epsilon marketing grew 16% and 8%, respectively.

The stock trades at a forward P/E ratio of 18, down from its five-year average of 21. This suggests that it could be trading at a discount to its intrinsic value. Alliance Data estimates long term EPS growth of around 17%, giving it a price/earnings-to-growth (PEG) ratio close to 1 — well under the business services industry average of 1.75. Investors have some downside protection with a $400 million share buyback program as well.

The stock price has fluctuated somewhat this year. It topped $300 a share in March, but dipped down under $235 in May due to an earnings miss. However, the stock has resumed its previous upward march as future estimates were revised. ADS currently trades at around $265.

The biggest companies in the business services industry are undoubtedly Visa and MasterCard. Both companies are trading at comparable fundamentals, but aren’t as diversified against interest rate risk as Alliance Data Systems. While still subject to a rising rate environment, increased growth from LoyaltyOne and Epsilon will help buffer the company against adverse rates.

Looking ahead, Alliance Data should continue to grow its new loyalty program in Brazil. The company has already entered ten markets and expects to add three new markets by the end of 2014, which should help drive growth.

Risks to consider: The company’s business segment of private credit cards and marketing solutions make it subject to interest rate risk, which could hurt earnings if rates rise quickly.

Actions to take–> The revised EPS estimates put the stocks value at around $305 per share — a 14% discount from current levels. Any market pullback should be seen as a buying opportunity for Alliance Data.

ADS is buying back $400 million worth of shares, which is the first step to raising its Total Yield score. My colleague, Nathan Slaughter, spends his time finding Total Yield stocks — characterized by share repurchases, a high dividend yield and debt pay down. Not only has the strategy returned an average of 15% per year since 1982, but 24 out of 25 of the stocks with the highest Total Yield ratings more than doubled the S&P 500’s return. For more information, click here.