DISCOVER FINANCIAL SERVICES (DFS)
US2547091080 - Common Stock
DFS gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 52 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.
DFS had a positive operating cash flow in the past year.
In the past 5 years DFS has always been profitable.
In the past 5 years DFS always reported a positive cash flow from operatings.
1.2 Ratios
DFS has a Return On Assets (1.87%) which is in line with its industry peers.
Looking at the Return On Equity, with a value of 17.60%, DFS is in the better half of the industry, outperforming 75.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.87% | ||
| ROE | 17.6% | ||
| ROIC | N/A |
ROA(3y)3.33%
ROA(5y)2.7%
ROE(3y)29.69%
ROE(5y)24.75%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
The Profit Margin of DFS (16.65%) is better than 80.77% of its industry peers.
DFS's Profit Margin has declined in the last couple of years.
DFS does not have Operating Margin and Gross Margin available, so we won't be analyzing them here.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | N/A | ||
| PM (TTM) | 16.65% | ||
| 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.
The number of shares outstanding for DFS has been reduced compared to 1 year ago.
DFS has less shares outstanding than it did 5 years ago.
DFS has a better debt/assets ratio than last year.
2.2 Solvency
The Debt to FCF ratio of DFS is 1.92, which is an excellent value as it means it would take DFS, only 1.92 years of fcf income to pay off all of its debts.
DFS has a Debt to FCF ratio of 1.92. This is amongst the best in the industry. DFS outperforms 82.69% of its industry peers.
DFS has a Debt/Equity ratio of 0.98. This is a neutral value indicating DFS is somewhat dependend on debt financing.
With a decent Debt to Equity ratio value of 0.98, DFS is doing good in the industry, outperforming 61.54% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.98 | ||
| Debt/FCF | 1.92 | ||
| Altman-Z | N/A |
ROIC/WACCN/A
WACC11.96%
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 13.00% in the past year. This is quite good.
DFS shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 8.17% yearly.
EPS 1Y (TTM)-8.09%
EPS 3Y46.34%
EPS 5Y7.57%
EPS Q2Q%42.47%
Revenue 1Y (TTM)13%
Revenue growth 3Y12.67%
Revenue growth 5Y8.17%
Sales Q2Q%10.11%
3.2 Future
DFS is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 3.56% yearly.
DFS is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 2.91% yearly.
EPS Next Y23%
EPS Next 2Y6.76%
EPS Next 3Y10.23%
EPS Next 5Y3.56%
Revenue Next Year11.46%
Revenue Next 2Y3.79%
Revenue Next 3Y3.86%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
DFS is valuated correctly with a Price/Earnings ratio of 13.98.
Compared to the rest of the industry, the Price/Earnings ratio of DFS is on the same level as its industry peers.
The average S&P500 Price/Earnings ratio is at 27.73. DFS is valued slightly cheaper when compared to this.
A Price/Forward Earnings ratio of 13.50 indicates a correct valuation of DFS.
The rest of the industry has a similar Price/Forward Earnings ratio as DFS.
When comparing the Price/Forward Earnings ratio of DFS to the average of the S&P500 Index (22.83), we can say DFS is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.98 | ||
| Fwd PE | 13.5 |
4.2 Price Multiples
Based on the Price/Free Cash Flow ratio, DFS is valued a bit cheaper than 63.46% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 4.62 | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
DFS's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
PEG (NY)0.61
PEG (5Y)1.85
EPS Next 2Y6.76%
EPS Next 3Y10.23%
5. Dividend
5.1 Amount
DFS has a Yearly Dividend Yield of 1.65%. Purely for dividend investing, there may be better candidates out there.
DFS's Dividend Yield is a higher than the industry average which is at 4.38.
DFS's Dividend Yield is slightly below the S&P500 average, which is at 2.34.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.65% |
5.2 History
The dividend of DFS is nicely growing with an annual growth rate of 12.65%!
DFS has been paying a dividend for at least 10 years, so it has 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
27.30% 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.
DP27.3%
EPS Next 2Y6.76%
EPS Next 3Y10.23%
DISCOVER FINANCIAL SERVICES
NYSE:DFS (12/20/2024, 8:05:12 PM)
After market: 174.36 +1.2 (+0.69%)173.16
+3.89 (+2.3%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryConsumer Finance
Earnings (Last)
Earnings (Next)
Inst Owners86.7%
Inst Owner Change0.5%
Ins Owners0.2%
Ins Owner Change-0.06%
Market Cap43.46B
Analysts70
Price Target171.64 (-0.88%)
Short Float %1.12%
Short Ratio1.7
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.65% |
Dividend Growth(5Y)12.65%
DP27.3%
Div Incr Years14
Div Non Decr Years15
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)16.03%
Min EPS beat(2)-63.13%
Max EPS beat(2)95.2%
EPS beat(4)1
Avg EPS beat(4)-6.67%
Min EPS beat(4)-63.13%
Max EPS beat(4)95.2%
EPS beat(8)2
Avg EPS beat(8)-5.55%
EPS beat(12)4
Avg EPS beat(12)-2.35%
EPS beat(16)8
Avg EPS beat(16)9.21%
Revenue beat(2)2
Avg Revenue beat(2)4.96%
Min Revenue beat(2)2.31%
Max Revenue beat(2)7.61%
Revenue beat(4)4
Avg Revenue beat(4)3.16%
Min Revenue beat(4)1.28%
Max Revenue beat(4)7.61%
Revenue beat(8)7
Avg Revenue beat(8)1.94%
Revenue beat(12)8
Avg Revenue beat(12)0.3%
Revenue beat(16)10
Avg Revenue beat(16)1.36%
PT rev (1m)10.71%
PT rev (3m)13.28%
EPS NQ rev (1m)1.73%
EPS NQ rev (3m)4.65%
EPS NY rev (1m)0.36%
EPS NY rev (3m)3.31%
Revenue NQ rev (1m)0.09%
Revenue NQ rev (3m)0.18%
Revenue NY rev (1m)-0.25%
Revenue NY rev (3m)0.67%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.98 | ||
| Fwd PE | 13.5 | ||
| P/S | 2.56 | ||
| P/FCF | 4.62 | ||
| P/OCF | 4.49 | ||
| P/B | 2.71 | ||
| P/tB | 2.75 | ||
| EV/EBITDA | N/A |
EPS(TTM)12.39
EY7.16%
EPS(NY)12.82
Fwd EY7.41%
FCF(TTM)37.47
FCFY21.64%
OCF(TTM)38.59
OCFY22.29%
SpS67.68
BVpS64.01
TBVpS63
PEG (NY)0.61
PEG (5Y)1.85
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.87% | ||
| ROE | 17.6% | ||
| ROCE | N/A | ||
| ROIC | N/A | ||
| ROICexc | N/A | ||
| ROICexgc | N/A | ||
| OM | N/A | ||
| PM (TTM) | 16.65% | ||
| GM | N/A | ||
| FCFM | 55.36% |
ROA(3y)3.33%
ROA(5y)2.7%
ROE(3y)29.69%
ROE(5y)24.75%
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-Score7
Asset Turnover0.11
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.98 | ||
| Debt/FCF | 1.92 | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | 72.42% | ||
| Cap/Sales | 1.65% | ||
| Interest Coverage | N/A | ||
| Cash Conversion | N/A | ||
| Profit Quality | 332.57% | ||
| Current Ratio | N/A | ||
| Quick Ratio | N/A | ||
| Altman-Z | N/A |
F-Score7
WACC11.96%
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 Y23%
EPS Next 2Y6.76%
EPS Next 3Y10.23%
EPS Next 5Y3.56%
Revenue 1Y (TTM)13%
Revenue growth 3Y12.67%
Revenue growth 5Y8.17%
Sales Q2Q%10.11%
Revenue Next Year11.46%
Revenue Next 2Y3.79%
Revenue Next 3Y3.86%
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 1Y53.85%
FCF growth 3Y11.65%
FCF growth 5Y10.84%
OCF growth 1Y53.53%
OCF growth 3Y11.39%
OCF growth 5Y10.53%