This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
|Zacks Rank||Definition||Annualized Return|
Zacks Rank Education - Learn more about the Zacks Rank
Zacks Rank Home - All Zacks Rank resources in one place
Zacks Premium - The only way to get access to the Zacks Rank
Discover Financial Services
by Zacks Equity ResearchOctober 08, 2012 | Comments : 0 Recommended this article: ()
This page is temporarily not available. Please check later as it should be available shortly. If you have any questions, please email customer support at firstname.lastname@example.org or call 800-767-3771 ext. 9339.
Furthermore, with a price-to-earnings (P/E) ratio of just 9.0, this Zacks #1 Rank (Strong Buy) direct banking and payment services company is a true value pick.
Strong Third Quarter Performance
On September 27, Discover Financial Services reported third quarter 2012 earnings of $1.21 per share, beating the Zacks Consensus Estimate by 17.8% and advancing from last year by 2.5%.
Total revenue (net of interest expense) increased 9.8% year over year to $1.96 billion. Net interest income improved 11% to $1.37 billion. Card sales volume advanced 4% from last year.
The quarter saw historic lows for credit card loan delinquencies and net charge-offs. The delinquency rate for loans over 30 days past due was 1.81% and the net charge-off rate was 2.43%.
Provision for loan losses increased 26% year over year to $126 million.
During the reported quarter, Discover Financial Services repurchased 10 million shares for $350 million under its $2 billion share repurchase program.
Positive Earnings Estimate Revisions
Over the last seven days, the Zacks Consensus Estimate for 2012 rose 6.4% to $4.51 as 13 of 17 estimates were revised upward. This represents a year-over-year increase of approximately 11%.
For 2013, the Zacks Consensus Estimate is up 5.1% to $4.36 in the same timeframe, as 13 of 17 estimates moved higher.
Along with a very attractive P/E multiple, Discover Financial Services has a price-to-book (P/B) ratio as low as 2.3 (a P/B ratio under 3.0 and P/E ratio below 15.0 indicate value.)
Moreover, the company has a 1-year return on equity (ROE) of 26.1%, higher than its peer group average of 21.0%.
Based in Riverwoods, Illinois and founded in 1986, Discover Financial Services is a credit card issuing and electronic payment services company in the United States. In March 2009, Discover became a bank holding company under the Bank Holding Company Act of 1956 and a financial holding company under the Gramm-Leach-Bliley Act in connection with its participation in the U.S. Treasurys Capital Purchase Program. The company offers its products and services with acceptance in more than 185 countries and territories.
Want More of Our Best Recommendations?
Zacks' Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential.