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Discover Financial (DFS) Q2 Earnings: A Surprise in Store?

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Discover Financial Services (DFS - Free Report) is set to report second-quarter 2016 results after the market closes on Jul 19, 2016. Last quarter, the company posted a positive earnings surprise of 3.85%. Let’s see how things are shaping up for this announcement.

Factors to be Considered this Quarter

Net interest income in the second quarter is likely  to have increased on loan growth and a higher net interest margin.

Improving card sales, compelling student loan portfolio are expected to have driven the top line.

Continued share buyback should boost the bottom line.

Also, Discover is likely to witness provisioning driven by loan growth in the quarter.

However, expenses likely have increased weighing on the margin expansion in the to be reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Discover Financial is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Discover Financial has an Earnings ESP of -0.70%. This is because the Most Accurate estimate stands at 1.41, while the Zacks Consensus Estimate is pegged at $1.42.

Zacks Rank: Discover Financial carries a Zacks Rank #3 (Hold).

Though the company has a favorable Zacks Rank its negative ESP complicates surprise prediction.

With respect to the surprise trend, Discover Financial surpassed expectations in three of the last four quarters. However, the average surprise was -1.18%.

The company’s share price has been fluctuating over the last few days. We wait to see how the stock reacts to the quarter’s results

DISCOVER FIN SV Price and EPS Surprise

Stocks to Consider

Here are some companies from the finance sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:  

First Midwest Bancorp Inc. has an Earnings ESP of +6.67% and a Zacks Rank #1. The company is also expected to report second-quarter earnings results on Jul 19.

SL Green Realty Corp (SLG - Free Report) has an Earnings ESP of +0.94% and a Zacks Rank #3. The company is expected to report second-quarter earnings results on Jul 20.

Regions Financial Corporation (RF - Free Report) has an Earnings ESP of +5% and a Zacks Rank #3. The company is slated to report second-quarter earnings results on Jul 19.

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Regions Financial Corporation (RF) - free report >>

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