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Headquartered in Riverwoods, Illinois, Discover Financial Services (DFS) is a leading provider of direct banking and payment services. Valued at $33.29 billion by market cap, Discover is renowned for its credit cards, personal loans, and student loans, alongside a global payments network that includes Discover Network, PULSE, and Diners Club International.
Shares of DFS have significantly outperformed the broader market over the past year. The stock has gained 50.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 27.7%. Also, in 2024, DFS is up 18.6% compared to SPX’s 18% rise on a YTD basis.
Narrowing the focus, DFS has also outperformed compared to the iShares U.S. Financial Services ETF (IYG). The exchange-traded fund has gained about 32.8% over the past year. Moreover, the ETF’s 17.8% gains on a YTD lagged behind the stock’s returns over the same time frame.
On Jul. 17, Discover Financial rose over 3% after reporting Q2 results. The company reported earnings of $1.53 billion, or $6.06 per share, surpassing Wall Street expectations of $3.06 per share. Also, the company's revenue of $5.99 billion exceeded analysts’ estimates of $4.16 billion.
For the current fiscal year, ending in December, analysts expect DFS’ EPS to grow 9.8% year over year to $12.36 on a diluted basis. The company's earnings surprise history is mixed. It missed the consensus estimates in three of the last four quarters while beating on another occasion.
Among the 18 analysts covering DFS stock, the consensus rating is a “Moderate Buy.” That’s based on seven “Strong Buy” ratings, one “Moderate Buy,” and 10 “Holds.”
On Aug. 15, Jefferies analyst John Hecht maintained a “Buy” rating on Discover Financial, with a price target of $167, implying a potential upside of 25.3% from current levels.
The mean price target is $147, representing a premium of 10.3% compared to DFS’ current price levels. The Street-high price target of $170 suggests an upside potential of 27.5%.
On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
