DISCOVER FINANCIAL SERVICES (DFS) Stock Fundamental Analysis
NYSE:DFS - New York Stock Exchange, Inc. - US2547091080 - Common Stock
Overall DFS gets a fundamental rating of 4 out of 10. We evaluated DFS against 53 industry peers in the Consumer Finance industry. Both the profitability and the financial health of DFS get a neutral evaluation. Nothing too spectacular is happening here. DFS has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
DFS had positive earnings in the past year.
In the past year DFS had a positive cash flow from operations.
DFS had positive earnings in each of the past 5 years.
DFS had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
DFS's Return On Assets of 2.52% is fine compared to the rest of the industry. DFS outperforms 63.46% of its industry peers.
Looking at the Return On Equity, with a value of 22.34%, DFS belongs to the top of the industry, outperforming 84.62% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.52% | ||
| ROE | 22.34% | ||
| ROIC | N/A |
ROA(3y)3.33%
ROA(5y)2.7%
ROE(3y)29.96%
ROE(5y)24.91%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
DFS has a better Profit Margin (17.73%) than 82.69% of its industry peers.
In the last couple of years the Profit Margin of DFS has declined.
The Operating Margin and Gross Margin are not available for DFS so they could not be analyzed.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | N/A | ||
| PM (TTM) | 17.73% | ||
| GM | N/A |
OM growth 3YN/A
OM growth 5YN/A
PM growth 3Y21.88%
PM growth 5Y-6.41%
GM growth 3YN/A
GM growth 5YN/A
2. Health
2.1 Basic Checks
DFS does not have a ROIC to compare to the WACC, probably because it is not profitable.
Compared to 1 year ago, DFS has less shares outstanding
The number of shares outstanding for DFS has been reduced compared to 5 years ago.
The debt/assets ratio for DFS has been reduced compared to a year ago.
2.2 Solvency
DFS has a debt to FCF ratio of 1.89. This is a very positive value and a sign of high solvency as it would only need 1.89 years to pay back of all of its debts.
DFS has a better Debt to FCF ratio (1.89) than 80.77% of its industry peers.
DFS has a Debt/Equity ratio of 0.97. This is a neutral value indicating DFS is somewhat dependend on debt financing.
DFS has a Debt to Equity ratio (0.97) which is comparable to the rest of the industry.
Even though the debt/equity ratio score it not favorable for DFS, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.97 | ||
| Debt/FCF | 1.89 | ||
| Altman-Z | N/A |
ROIC/WACCN/A
WACC11.65%
2.3 Liquidity
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | N/A | ||
| Quick Ratio | N/A |
3. Growth
3.1 Past
DFS shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -8.09%.
The Earnings Per Share has been growing slightly by 7.57% on average over the past years.
The Revenue has grown by 40.02% in the past year. This is a very strong growth!
Measured over the past years, DFS shows a quite strong growth in Revenue. The Revenue has been growing by 8.17% on average per year.
EPS 1Y (TTM)-8.09%
EPS 3Y46.34%
EPS 5Y7.57%
EPS Q2Q%42.47%
Revenue 1Y (TTM)40.02%
Revenue growth 3Y12.67%
Revenue growth 5Y8.17%
Sales Q2Q%10.11%
3.2 Future
The Earnings Per Share is expected to grow by 3.56% on average over the next years.
Based on estimates for the next years, DFS will show a small growth in Revenue. The Revenue will grow by 2.91% on average per year.
EPS Next Y24.73%
EPS Next 2Y7.07%
EPS Next 3Y10.34%
EPS Next 5Y3.56%
Revenue Next Year14%
Revenue Next 2Y4.96%
Revenue Next 3Y4.85%
Revenue Next 5Y2.91%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
DFS is valuated correctly with a Price/Earnings ratio of 15.28.
DFS's Price/Earnings ratio is in line with the industry average.
DFS's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.29.
Based on the Price/Forward Earnings ratio of 14.67, the valuation of DFS can be described as correct.
DFS's Price/Forward Earnings ratio is in line with the industry average.
DFS is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 24.44, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.28 | ||
| Fwd PE | 14.67 |
4.2 Price Multiples
DFS's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 5.26 | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
PEG (NY)0.62
PEG (5Y)2.02
EPS Next 2Y7.07%
EPS Next 3Y10.34%
5. Dividend
5.1 Amount
DFS has a Yearly Dividend Yield of 1.51%.
Compared to an average industry Dividend Yield of 4.39, DFS pays a bit more dividend than its industry peers.
DFS's Dividend Yield is slightly below the S&P500 average, which is at 2.28.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.51% |
5.2 History
On average, the dividend of DFS grows each year by 12.65%, which is quite nice.
DFS has paid a dividend for at least 10 years, which is a reliable track record.
DFS has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)12.65%
Div Incr Years14
Div Non Decr Years15
5.3 Sustainability
20.17% of the earnings are spent on dividend by DFS. This is a low number and sustainable payout ratio.
DFS's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP20.17%
EPS Next 2Y7.07%
EPS Next 3Y10.34%
DISCOVER FINANCIAL SERVICES
NYSE:DFS (1/21/2025, 8:04:00 PM)
After market: 189.26 0 (0%)189.26
+2.08 (+1.11%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryConsumer Finance
Earnings (Last)
Earnings (Next)
Inst Owners86.7%
Inst Owner Change-0.1%
Ins Owners0.2%
Ins Owner Change-0.03%
Market Cap47.55B
Analysts70
Price Target175.36 (-7.34%)
Short Float %1.19%
Short Ratio1.81
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.51% |
Yearly Dividend2.91
Dividend Growth(5Y)12.65%
DP20.17%
Div Incr Years14
Div Non Decr Years15
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)50.99%
Min EPS beat(2)6.78%
Max EPS beat(2)95.2%
EPS beat(4)2
Avg EPS beat(4)-0.06%
Min EPS beat(4)-63.13%
Max EPS beat(4)95.2%
EPS beat(8)3
Avg EPS beat(8)-3.96%
EPS beat(12)5
Avg EPS beat(12)-1.73%
EPS beat(16)8
Avg EPS beat(16)6.19%
Revenue beat(2)2
Avg Revenue beat(2)4.49%
Min Revenue beat(2)1.37%
Max Revenue beat(2)7.61%
Revenue beat(4)4
Avg Revenue beat(4)3.18%
Min Revenue beat(4)1.37%
Max Revenue beat(4)7.61%
Revenue beat(8)7
Avg Revenue beat(8)1.85%
Revenue beat(12)9
Avg Revenue beat(12)0.87%
Revenue beat(16)10
Avg Revenue beat(16)1.4%
PT rev (1m)2.17%
PT rev (3m)15.73%
EPS NQ rev (1m)0%
EPS NQ rev (3m)17.33%
EPS NY rev (1m)0%
EPS NY rev (3m)4.77%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)6.52%
Revenue NY rev (1m)2.31%
Revenue NY rev (3m)2.96%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.28 | ||
| Fwd PE | 14.67 | ||
| P/S | 2.21 | ||
| P/FCF | 5.26 | ||
| P/OCF | 5.1 | ||
| P/B | 2.78 | ||
| P/tB | 2.82 | ||
| EV/EBITDA | N/A |
EPS(TTM)12.39
EY6.55%
EPS(NY)12.9
Fwd EY6.81%
FCF(TTM)36.01
FCFY19.03%
OCF(TTM)37.1
OCFY19.6%
SpS85.81
BVpS68.1
TBVpS67.09
PEG (NY)0.62
PEG (5Y)2.02
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.52% | ||
| ROE | 22.34% | ||
| ROCE | N/A | ||
| ROIC | N/A | ||
| ROICexc | N/A | ||
| ROICexgc | N/A | ||
| OM | N/A | ||
| PM (TTM) | 17.73% | ||
| GM | N/A | ||
| FCFM | 41.97% |
ROA(3y)3.33%
ROA(5y)2.7%
ROE(3y)29.96%
ROE(5y)24.91%
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3YN/A
OM growth 5YN/A
PM growth 3Y21.88%
PM growth 5Y-6.41%
GM growth 3YN/A
GM growth 5YN/A
F-Score8
Asset Turnover0.14
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.97 | ||
| Debt/FCF | 1.89 | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | 73.19% | ||
| Cap/Sales | 1.27% | ||
| Interest Coverage | N/A | ||
| Cash Conversion | N/A | ||
| Profit Quality | 236.74% | ||
| Current Ratio | N/A | ||
| Quick Ratio | N/A | ||
| Altman-Z | N/A |
F-Score8
WACC11.65%
ROIC/WACCN/A
Cap/Depr(3y)48.25%
Cap/Depr(5y)52.74%
Cap/Sales(3y)1.76%
Cap/Sales(5y)2.02%
Profit Quality(3y)186.28%
Profit Quality(5y)259.95%
High Growth Momentum
Growth
EPS 1Y (TTM)-8.09%
EPS 3Y46.34%
EPS 5Y7.57%
EPS Q2Q%42.47%
EPS Next Y24.73%
EPS Next 2Y7.07%
EPS Next 3Y10.34%
EPS Next 5Y3.56%
Revenue 1Y (TTM)40.02%
Revenue growth 3Y12.67%
Revenue growth 5Y8.17%
Sales Q2Q%10.11%
Revenue Next Year14%
Revenue Next 2Y4.96%
Revenue Next 3Y4.85%
Revenue Next 5Y2.91%
EBIT growth 1YN/A
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next Year-83.12%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y48.79%
FCF growth 3Y11.65%
FCF growth 5Y10.84%
OCF growth 1Y47.79%
OCF growth 3Y11.39%
OCF growth 5Y10.53%