Discover Financial Services
 (DFS)

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  • Thu, Jan. 28, 10:20 AM
    • Much of last night's earnings miss was thanks to higher than expected loan loss provisions, says analyst John Pancari. Though management took note of a still relatively benign credit environment, it expects provisions to closely track loan growth, and sees this year's net charge-offs to be slightly higher than 2015.
    • Though the Q4 reserve build was a surprise, says Pancari, the bullish thesis remains intact - the company's returns are comfortably above peers with a generally lower risk profile and an attractive 8.7x P/E valuation.
    • Discover (DFS -7.1%) remains a Buy with $57 price target.
    • Previously: Discover lower after earnings miss (Jan. 27)
    • Previously: Discover Financial Services misses by $0.16, misses on revenue (Jan. 27)
    | Thu, Jan. 28, 10:20 AM
  • Wed, Jan. 27, 4:30 PM
    • Q4 net income of $500M or $1.14 per share vs. $404M and $0.87 one year ago.
    • Direct Banking pretax income of $767M up 19% Y/Y, but fell after excluding last year's one-time items. Total loans of $72.4B up 3.5%. Credit card loans of $57.9B up 3.1%. Personal loans up 9.6%, Private student loans up 3%. Net interest income up 4%, with NIM of 9.75% down two basis points. Delinquency rate of 1.72% down one basis points from a year ago, up seven basis points from last quarter. Loan loss provision of $486M up $32M. Expenses up 3% Y/Y thanks to regulatory and compliance costs.
    • Payment Services pretax income of $21M up sharply from last year which included a $21M charge. Transaction dollar volume of $45.9B down 10%. PULSE transaction dollar volume fell 14% thanks to the loss of volume from a large debit issuer.
    • 8M shares bought back during quarter for $435M. Float fell by 1.8%.
    • Conference call at 5 ET
    • Previously: Discover Financial Services misses by $0.16, misses on revenue (Jan. 27)
    • DFS -2.9% after hours
    | Wed, Jan. 27, 4:30 PM | 7 Comments
  • Wed, Jan. 27, 4:18 PM
    • Discover Financial Services (NYSE:DFS): Q4 EPS of $1.14 misses by $0.16.
    • Revenue of $2.21B (+8.3% Y/Y) misses by $10M.
    • Press Release
    | Wed, Jan. 27, 4:18 PM | 3 Comments
  • Tue, Jan. 26, 5:35 PM
  • Thu, Jan. 14, 5:57 PM
    • Discover Financial Services (NYSE:DFS) declares $0.28/share quarterly dividend, in line with previous.
    • Forward yield 2.23%
    • Payable Feb. 18; for shareholders of record Feb. 4; ex-div Feb. 2.
    | Thu, Jan. 14, 5:57 PM
  • Thu, Jan. 14, 10:36 AM
    • Discover (NYSE:DFS) is lower by 8.2% year-to-date, but also by 20% year-over-year. JPMorgan downgrades to Neutral from Overweight, and cuts the price target to $56 from $60 (current price is $49.31).
    • The move is notable considering two upgrades for Discover earlier this week, along with another sell-sider launching coverage on the company with a Buy recommendation.
    • DFS is flat in today's session.
    | Thu, Jan. 14, 10:36 AM | 1 Comment
  • Wed, Jan. 13, 10:12 AM
    • Positive overall on the sector for 2016 thanks to stable loan growth, benign credit trends, and benefits from rising rates, Goldman's Ryan Nash throws in the towel on a Buy call for American Express (AXP -1.1%).
    • His team's top pick in the space is Synchrony Financial (SYF -0.4%), which is added to the bank's Americas Conviction Buy list. The next favored name is Discover (DFS).
    • Previously: Discover, Synchrony are favorites as DA Davidson launches card issuer coverage (Jan. 13)
    | Wed, Jan. 13, 10:12 AM
  • Wed, Jan. 13, 8:12 AM
    • The leading private label credit card issuer in the country, Synchrony FInancial (NYSE:SYF) has seen a good deal of technical pressure on its stock thanks to the GE exchange offer. This leaves the shares at their lowest forward P/E multiple over the past year. Putting a 13x multiple on expected 2016 EPS brings a price target of $37 vs. last night's $28.90 close.
    • It's steady growth at a good price for Discover Financial (NYSE:DFS), says the team, which rates that stock a Buy with $63 price target (vs. $51 close yesterday). That price would be 11x estimated 2016 EPS.
    • Capital One (NYSE:COF) and American Express (NYSE:AXP) are rated Neutral.
    | Wed, Jan. 13, 8:12 AM | 5 Comments
  • Thu, Jan. 7, 10:34 AM
    • "We’re more positive on the top-line growth story, as expectations have come down and we found 10 potential growth catalysts," says analyst David Ho, upgrading Discover (DFS +0.1%) to Buy with $61 price target. Among those are the lagged benefit from last year's growth initiatives, prime segment expansion, and line increases.
    • He also sees credit concerns as less of a headwind vs. peers. At just 8.9x 2016 estimated earnings, Discover is due for a re-rating.
    • The stock is up only marginally on the session, but outperforming peers by 100 basis points or more.
    • See also: Deutsche downgrades Capital One (Jan. 7)
    | Thu, Jan. 7, 10:34 AM | 1 Comment
  • Dec. 16, 2015, 11:11 AM
    • A near-20% decline year-to-date means the share price already reflects expected headwinds and higher costs, says analyst Stephen Biggar, upgrading Discover Financial (DFS +0.3%) to Buy with $60 price target.
    • Among those headwinds are promotional rewards costs, and although they're rising, Biggar is encouraged by healthy new account growth thanks to the success of double rewards and Apple Pay. He expects the company will be able to achieve 3-5% growth in card receivables next year.
    • A large "green field" for the company is international expansion, says Biggar, noting Discover's domestic card portfolio still accounts for 80% of average earning assets.
    | Dec. 16, 2015, 11:11 AM | 1 Comment
  • Nov. 20, 2015, 12:48 PM
    • The credit card sector is notable of late for strong asset growth, says analyst Eric Wasserstrom, but it's not resulting in net income growth expansion. RIsing marketing and rewards costs combining with higher provisions are to blame, he says, and higher interest rates will boost funding costs and constrain margins.
    • Wasserstrom and team see net income growth for Capital One (NYSE:COF) of just 0-2% in 2016-17, and for Discover (NYSE:DFS) of 1-2%, with all of this coming from share repurchases.
    • He's got a better outlook for Synchrony Financial (NYSE:SYF), which is his pick in the card space. Turning elsewhere, Goldman Sachs (NYSE:GS) - levered to the improving corporate M&A cycle - is his best idea.
    | Nov. 20, 2015, 12:48 PM
  • Oct. 20, 2015, 4:28 PM
    • Q3 net income of $612M or $1.38 per share vs. $644M and $1.37 one year ago.
    • Direct Banking pretax income of $950M down 3% Y/Y, with higher expenses for anti-money laundering only party offset by lower loan loss provisions. Total loans of $70.1B up 4.1%. Personal loans up 12.3%, and private student loans up 3.2%. Net interest income up 3%, with NIM of 9.63% down 16 basis points.
    • Payment Services pretax income of $24M down $4M from last year. Payment services transaction volume of $46B down 7% Y/Y. PULSE transaction dollar volume down 11%. Network Partners volume up 47%.
    • $435M of stock bought back during quarter, cutting the float by 1.8%.
    • Conference call at 5 ET
    • Previously: Discover Financial Services beats by $0.05, misses on revenue (Oct. 20)
    • DFS +0.5% after hours
    | Oct. 20, 2015, 4:28 PM
  • Oct. 20, 2015, 4:24 PM
    • Discover Financial Services (NYSE:DFS): Q3 EPS of $1.38 beats by $0.05.
    • Revenue of $2.19B (flat Y/Y) misses by $20M.
    | Oct. 20, 2015, 4:24 PM
  • Oct. 19, 2015, 5:35 PM
  • Oct. 15, 2015, 5:21 PM
    • Discover Financial Services (NYSE:DFS) declares $0.28/share quarterly dividend, in line with previous.
    • Forward yield 2.02%
    • Payable Nov. 19; for shareholders of record Nov. 5; ex-div Nov. 3.
    | Oct. 15, 2015, 5:21 PM
  • Oct. 5, 2015, 9:27 AM
    • After a tough stretch for the stock - down more than 20% YTD - Discover (NYSE:DFS) trades at a relative P/E of 62% vs. the S&P 500, well below the long-term average of 70%, says analyst Kevin St. Pierre, upgrading to Outperform. His $69 price target is 33% above Friday's close.
    • St. Pierre figures Discover is sitting on about $5.50 per share of excess capital above the target CET1 ratio of 11%.
    • He also takes note of Discover's network - it has the same capacity as that of MasterCard and Visa, but is massively underutilized, says St. Pierre.
    • He now has Outperform ratings on all of the card issuers. His favorites over the next 12 months are Capital One (NYSE:COF) and Synchrony Financial (NYSE:SYF), over the next two-three years DIscover, and American Express (NYSE:AXP) over the longer term.
    • DFS +1.4% to $52.92 premarket.
    | Oct. 5, 2015, 9:27 AM
Company Description
Discover Financial Services is a direct banking and payment services company. The Company offers credit card loans, private student loans, personal loans, home equity loans and deposit products.
Sector: Financial
Industry: Credit Services
Country: United States