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Discover Financial (DFS) to Report Q1 Earnings: What's in Store?
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Discover Financial Services (DFS - Free Report) is slated to report first-quarter 2023 earnings on Apr 19, after market close. The company’s earnings beat estimates in the last reported quarter.
EstimateTrend
The Zacks Consensus Estimate for first-quarter earnings per share of $3.92 has witnessed three upward revisions and two downward movements in the past 30 days. The consensus estimate is indicative of a 7.1% decrease from the year-ago reported figure. Similarly, the Zacks Consensus Estimate for first-quarter revenues is pegged at $3.7 billion, suggesting a decline of 26.1% from the year-ago reported figure.
Discover Financial beat earnings estimates in three of the trailing four quarters and missed once, delivering an average surprise of 6.4%. This is depicted in the graph below.
Discover Financial Services Price and EPS Surprise
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 chances of an earnings beat, which is precisely the case here.
Earnings ESP: Discover Financial has an Earnings ESP of +0.99%. This is because the Most Accurate Estimate of $3.96 is pegged higher than the Zacks Consensus Estimate of $3.92. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: DFS currently carries a Zacks Rank of 3.
Factors Driving Q1 Results
The top line of Discover Financial is expected to have benefited from higher net interest income, the primary contributor to its revenues. This metric is likely to have been driven by strong asset growth and net interest margin expansion in the first quarter.
The Zacks Consensus Estimate for the net interest income of DFS is pegged at $3,041 million, indicating 22.6% growth from the prior-year quarter’s reported figure.
Strong sales, moderation in payment rates and improved new account growth are expected to have provided an impetus to receivable growth in the to-be-reported quarter. DFS’s disciplined underwriting, pricing and marketing of its non-card products are likely to have boosted the top line in the first quarter. Meanwhile, the net interest margin is likely to have been favored by a high-interest rate environment.
The top line of Discover Financial is expected to have benefited from improving non-interest income in the first quarter. Improved loan fee income, and higher net discount and interchange revenues, aided by favorable sales mix and solid sales, are likely to have contributed to the non-interest income of DFS. However, strong sales usually give rise to high reward costs, which is expected to have partially offset the company's non-interest income.
The Zacks Consensus Estimate for the non-interest income of DFS is pegged at $604 million, indicating 42.8% growth from the prior-year quarter’s reported figure. Our estimate for non-interest income suggests a 55% rise from the prior-year quarter’s reported number.
Strong performances of the Digital Banking and Payment Services segments are likely to have provided an impetus to the performance of Discover Financial in the to-be-reported quarter.
Improved net interest income and loan growth are likely to have aided the performance of the Digital Banking segment. Increased debit transaction volume and rebounding travel and entertainment spending are expected to have driven PULSE and Diners Club volume, which is likely to have aided the performance of the Payment Services unit.
However, the bottom line of Discover Financial is likely to have suffered a setback due to escalating compensation costs, marketing expenses and professional fees. Marketing costs and professional fees are likely to have witnessed increases as DFS has been investing in technology, and card and consumer banking products. The bottom line is likely to have been impaired by rising provisions for bad loans in the first quarter. Yet, higher consumer spending volume positions the company for an earnings beat this time around.
Stocks to Consider
Here are some other companies from the Finance space, which according to our model, have the right combination of elements to beat on earnings this time around:
CNO Financial Group, Inc. (CNO - Free Report) has an Earnings ESP of +2.36% and currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at 64 cents, indicating an increase of 52.4% from the year-ago reported figure.
CNO’s earnings beat estimates in three of the last four reported quarters and missed once.
Kinsale Capital Group (KNSL - Free Report) has an Earnings ESP of +3.34% and currently flaunts a Zacks Rank of 1. The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at $2.25, indicating an increase of 38% from the year-ago reported figure.
KNSL’s earnings beat estimates in the last four reported quarters.
Primerica, Inc. (PRI - Free Report) has an Earnings ESP of +4.12% and currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for first-quarter 2023 earnings stands at $3.4, implying an increase of 61.1% from the year-ago reported figure.
PRI’s earnings beat estimates in two of the last four reported quarters and missed in the other two.
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Discover Financial (DFS) to Report Q1 Earnings: What's in Store?
Discover Financial Services (DFS - Free Report) is slated to report first-quarter 2023 earnings on Apr 19, after market close. The company’s earnings beat estimates in the last reported quarter.
EstimateTrend
The Zacks Consensus Estimate for first-quarter earnings per share of $3.92 has witnessed three upward revisions and two downward movements in the past 30 days. The consensus estimate is indicative of a 7.1% decrease from the year-ago reported figure. Similarly, the Zacks Consensus Estimate for first-quarter revenues is pegged at $3.7 billion, suggesting a decline of 26.1% from the year-ago reported figure.
Discover Financial beat earnings estimates in three of the trailing four quarters and missed once, delivering an average surprise of 6.4%. This is depicted in the graph below.
Discover Financial Services Price and EPS Surprise
Discover Financial Services price-eps-surprise | Discover Financial Services Quote
What the Zacks Model Says
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 chances of an earnings beat, which is precisely the case here.
Earnings ESP: Discover Financial has an Earnings ESP of +0.99%. This is because the Most Accurate Estimate of $3.96 is pegged higher than the Zacks Consensus Estimate of $3.92. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: DFS currently carries a Zacks Rank of 3.
Factors Driving Q1 Results
The top line of Discover Financial is expected to have benefited from higher net interest income, the primary contributor to its revenues. This metric is likely to have been driven by strong asset growth and net interest margin expansion in the first quarter.
The Zacks Consensus Estimate for the net interest income of DFS is pegged at $3,041 million, indicating 22.6% growth from the prior-year quarter’s reported figure.
Strong sales, moderation in payment rates and improved new account growth are expected to have provided an impetus to receivable growth in the to-be-reported quarter. DFS’s disciplined underwriting, pricing and marketing of its non-card products are likely to have boosted the top line in the first quarter. Meanwhile, the net interest margin is likely to have been favored by a high-interest rate environment.
The top line of Discover Financial is expected to have benefited from improving non-interest income in the first quarter. Improved loan fee income, and higher net discount and interchange revenues, aided by favorable sales mix and solid sales, are likely to have contributed to the non-interest income of DFS. However, strong sales usually give rise to high reward costs, which is expected to have partially offset the company's non-interest income.
The Zacks Consensus Estimate for the non-interest income of DFS is pegged at $604 million, indicating 42.8% growth from the prior-year quarter’s reported figure. Our estimate for non-interest income suggests a 55% rise from the prior-year quarter’s reported number.
Strong performances of the Digital Banking and Payment Services segments are likely to have provided an impetus to the performance of Discover Financial in the to-be-reported quarter.
Improved net interest income and loan growth are likely to have aided the performance of the Digital Banking segment. Increased debit transaction volume and rebounding travel and entertainment spending are expected to have driven PULSE and Diners Club volume, which is likely to have aided the performance of the Payment Services unit.
However, the bottom line of Discover Financial is likely to have suffered a setback due to escalating compensation costs, marketing expenses and professional fees. Marketing costs and professional fees are likely to have witnessed increases as DFS has been investing in technology, and card and consumer banking products. The bottom line is likely to have been impaired by rising provisions for bad loans in the first quarter. Yet, higher consumer spending volume positions the company for an earnings beat this time around.
Stocks to Consider
Here are some other companies from the Finance space, which according to our model, have the right combination of elements to beat on earnings this time around:
CNO Financial Group, Inc. (CNO - Free Report) has an Earnings ESP of +2.36% and currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at 64 cents, indicating an increase of 52.4% from the year-ago reported figure.
CNO’s earnings beat estimates in three of the last four reported quarters and missed once.
Kinsale Capital Group (KNSL - Free Report) has an Earnings ESP of +3.34% and currently flaunts a Zacks Rank of 1. The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at $2.25, indicating an increase of 38% from the year-ago reported figure.
You can see the complete list of today’s Zacks #1 Rank stocks here.
KNSL’s earnings beat estimates in the last four reported quarters.
Primerica, Inc. (PRI - Free Report) has an Earnings ESP of +4.12% and currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for first-quarter 2023 earnings stands at $3.4, implying an increase of 61.1% from the year-ago reported figure.
PRI’s earnings beat estimates in two of the last four reported quarters and missed in the other two.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.