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What's in the Cards for Discover Financial (DFS) Q1 Earnings?
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Discover Financial Services (DFS - Free Report) is slated to report first-quarter 2022 results on Apr 27, after the closing bell.
In the last reported quarter, DFS reported fourth-quarter 2021 adjusted earnings of $3.64 per share, which outpaced the Zacks Consensus Estimate of $3.61. The bottom line also improved 41% year over year.
DFS’ first-quarter revenues are likely to have delivered an improved sales volume on account of solid performances of retail, and travel and entertainment businesses. New account growth, increased sales, higher discount/interchange revenue might have contributed to Discover Financial’s top-line in the to-be-reported quarter.
The Zacks Consensus Estimate for Discover Financial’s revenues is pegged at $2.9 billion, indicating an improvement of 6.5% from the year-ago quarter’s reported figure.
DFS is likely to have witnessed higher net interest income in the quarter under review.
Reduced funding costs and lower interest charge-offs are likely to have boosted the net interest income. The consensus mark for the same suggests growth of 5.5% from the prior-year quarter’s reported figure.
DFS’ loan fee income is likely to have witnessed an uptick in the to-be-reported quarter, courtesy of the gradual economic recovery. The Zacks Consensus Estimate for loan fee income indicates an improvement of 15% from the prior-year quarter’s reported number.
DFS’ allowance for loan losses might have gained on the back of better economic conditions, continued strength in credit performance and improved delinquency trends. The Zacks Consensus Estimate for the metric (allowance for loan losses) suggests a decline of 7.6% from the year-ago quarter’s reported figure.
The Digital Banking and Payment Services segments of Discover Financial are likely to dent its first-quarter results.
The consensus mark for income before income taxes for Digital Banking indicates a decline of 32.7% from year-ago quarter’s actuals.
Its Payments Services segment is likely to have been affected by an unrealized loss on equity investments. The consensus mark for revenues from the segment indicates a downside of 57.5% from the year-ago quarter’s reading. The consensus mark for income before income taxes from Payments Services implies a downside of 21.5% from the year-ago quarter’s tally.
DFS’ operating expenses might have escalated in the to-be-reported quarter due to higher marketing expenses incurred for investments in technology and analytics. This is likely to have drained its margins.
The Zacks Consensus Estimate for DFS’ first-quarter earnings stands at $3.58 per share, hinting at a decrease of 29% from the year-ago quarter’s reported quarter.
What Our Quantitative Model Unveils
Our proven model predicts an earnings beat for Discover Financial this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: Discover Financial has an Earnings ESP of +1.14%. This is because the Most Accurate Estimate of $3.62 is pegged higher than the Zacks Consensus Estimate of $3.58. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Some other stocks worth considering from the finance space with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:
Aflac Incorporated (AFL - Free Report) currently has an Earnings ESP of +1.76% and Zacks Rank of 3. AFL managed to deliver a trailing four-quarter earnings surprise of 18.20%, on average. AFL will report Q1 results on Apr 27.
Arthur J. Gallagher & Co. (AJG - Free Report) has an Earnings ESP of +0.89% and a Zacks Rank of 1 at present. AJG will report first-quarter earnings on Apr 28. AJG managed to surpass estimates in all its trailing four quarters, the average being 8.76%.
The Allstate Corporation (ALL - Free Report) will report first-quarter 2022 earnings results on May 4. ALL has an Earnings ESP of +5.15% and a Zacks Rank #3, currently. ALL managed to beat estimates in three of its trailing four quarters (missing the mark in one), the average surprise being 7.72%.
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What's in the Cards for Discover Financial (DFS) Q1 Earnings?
Discover Financial Services (DFS - Free Report) is slated to report first-quarter 2022 results on Apr 27, after the closing bell.
In the last reported quarter, DFS reported fourth-quarter 2021 adjusted earnings of $3.64 per share, which outpaced the Zacks Consensus Estimate of $3.61. The bottom line also improved 41% year over year.
Let’s see how things have shaped up prior to the first-quarter earnings announcement.
Trend in Estimate Revision
Over the past 30 days, DFS has witnessed its 2022 and 2023 earnings estimates move 1.4% and 0.6% north, respectively.
Discover Financial’s earnings beat estimates in each of the trailing four quarters, the average being 32.54%. This is depicted in the graph below.
Discover Financial Services Price and EPS Surprise
Discover Financial Services price-eps-surprise | Discover Financial Services Quote
Factors to Note
DFS’ first-quarter revenues are likely to have delivered an improved sales volume on account of solid performances of retail, and travel and entertainment businesses. New account growth, increased sales, higher discount/interchange revenue might have contributed to Discover Financial’s top-line in the to-be-reported quarter.
The Zacks Consensus Estimate for Discover Financial’s revenues is pegged at $2.9 billion, indicating an improvement of 6.5% from the year-ago quarter’s reported figure.
DFS is likely to have witnessed higher net interest income in the quarter under review.
Reduced funding costs and lower interest charge-offs are likely to have boosted the net interest income. The consensus mark for the same suggests growth of 5.5% from the prior-year quarter’s reported figure.
DFS’ loan fee income is likely to have witnessed an uptick in the to-be-reported quarter, courtesy of the gradual economic recovery. The Zacks Consensus Estimate for loan fee income indicates an improvement of 15% from the prior-year quarter’s reported number.
DFS’ allowance for loan losses might have gained on the back of better economic conditions, continued strength in credit performance and improved delinquency trends. The Zacks Consensus Estimate for the metric (allowance for loan losses) suggests a decline of 7.6% from the year-ago quarter’s reported figure.
The Digital Banking and Payment Services segments of Discover Financial are likely to dent its first-quarter results.
The consensus mark for income before income taxes for Digital Banking indicates a decline of 32.7% from year-ago quarter’s actuals.
Its Payments Services segment is likely to have been affected by an unrealized loss on equity investments. The consensus mark for revenues from the segment indicates a downside of 57.5% from the year-ago quarter’s reading. The consensus mark for income before income taxes from Payments Services implies a downside of 21.5% from the year-ago quarter’s tally.
DFS’ operating expenses might have escalated in the to-be-reported quarter due to higher marketing expenses incurred for investments in technology and analytics. This is likely to have drained its margins.
The Zacks Consensus Estimate for DFS’ first-quarter earnings stands at $3.58 per share, hinting at a decrease of 29% from the year-ago quarter’s reported quarter.
What Our Quantitative Model Unveils
Our proven model predicts an earnings beat for Discover Financial this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: Discover Financial has an Earnings ESP of +1.14%. This is because the Most Accurate Estimate of $3.62 is pegged higher than the Zacks Consensus Estimate of $3.58. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Discover Financial carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks to Consider
Some other stocks worth considering from the finance space with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:
Aflac Incorporated (AFL - Free Report) currently has an Earnings ESP of +1.76% and Zacks Rank of 3. AFL managed to deliver a trailing four-quarter earnings surprise of 18.20%, on average. AFL will report Q1 results on Apr 27.
Arthur J. Gallagher & Co. (AJG - Free Report) has an Earnings ESP of +0.89% and a Zacks Rank of 1 at present. AJG will report first-quarter earnings on Apr 28. AJG managed to surpass estimates in all its trailing four quarters, the average being 8.76%.
The Allstate Corporation (ALL - Free Report) will report first-quarter 2022 earnings results on May 4. ALL has an Earnings ESP of +5.15% and a Zacks Rank #3, currently. ALL managed to beat estimates in three of its trailing four quarters (missing the mark in one), the average surprise being 7.72%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.