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Discover (DFS) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Discover (DFS - Free Report) closed at $55.08, marking a -1.5% move from the previous day. This move lagged the S&P 500's daily loss of 0.36%. At the same time, the Dow lost 0.65%, and the tech-heavy Nasdaq gained 0.15%.

DFS will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.24, down 89.66% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $2.63 billion, down 7.71% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.67 per share and revenue of $10.88 billion, which would represent changes of -81.61% and -5.06%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for DFS. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 15.53% lower. DFS is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, DFS is holding a Forward P/E ratio of 33.51. Its industry sports an average Forward P/E of 13.87, so we one might conclude that DFS is trading at a premium comparatively.

We can also see that DFS currently has a PEG ratio of 6.58. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Financial - Consumer Loans industry currently had an average PEG ratio of 0.88 as of yesterday's close.

The Financial - Consumer Loans industry is part of the Finance sector. This group has a Zacks Industry Rank of 235, putting it in the bottom 8% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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