DISCOVER FINANCIAL SERVICES(NYSE:DFS) stock Fundamental Analysis

Fundamental Rating

DFS gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 53 industry peers in the Consumer Finance industry. DFS has an average financial health and profitability rating. DFS is not valued too expensively and it also shows a decent growth rate.

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1. Profitability

1.1 Basic Checks

In the past year DFS was profitable.

In the past year DFS had a positive cash flow from operations.

In the past 5 years DFS has always been profitable.

DFS had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

DFS has a better Return On Assets (3.56%) than 71.70% of its industry peers.

DFS has a Return On Equity of 29.34%. This is amongst the best in the industry. DFS outperforms 88.68% of its industry peers.

		Industry Rank	Sector Rank
ROA	3.56%
ROE	29.34%
ROIC	N/A

ROA(3y)2.69%

ROA(5y)2.78%

ROE(3y)24.58%

ROE(5y)24.76%

ROIC(3y)N/A

ROIC(5y)N/A

1.3 Margins

Looking at the Profit Margin, with a value of 23.83%, DFS belongs to the top of the industry, outperforming 88.68% of the companies in the same industry.

In the last couple of years the Profit Margin of DFS has remained more or less at the same level.

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)	23.83%
GM	N/A

OM growth 3YN/A

OM growth 5YN/A

PM growth 3Y-17.54%

PM growth 5Y-0.44%

GM growth 3YN/A

GM growth 5YN/A

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ROA

ROE

ROIC

Operating and Profit Margin

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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 increased compared to 1 year ago.

Compared to 5 years ago, DFS has less shares outstanding

Compared to 1 year ago, DFS has an improved debt to assets ratio.

2.2 Solvency

DFS has a debt to FCF ratio of 1.93. This is a very positive value and a sign of high solvency as it would only need 1.93 years to pay back of all of its debts.

DFS has a Debt to FCF ratio of 1.93. This is amongst the best in the industry. DFS outperforms 83.02% of its industry peers.

A Debt/Equity ratio of 0.53 indicates that DFS is somewhat dependend on debt financing.

DFS has a Debt to Equity ratio of 0.53. This is in the better half of the industry: DFS outperforms 71.70% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.53
Debt/FCF	1.93
Altman-Z	N/A

ROIC/WACCN/A

WACC13.62%

2.3 Liquidity

		Industry Rank	Sector Rank
Current Ratio	N/A
Quick Ratio	N/A

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

DFS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 41.87%, which is quite impressive.

DFS shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 11.94% yearly.

Looking at the last year, DFS shows a very strong growth in Revenue. The Revenue has grown by 39.16%.

The Revenue has been growing by 9.34% on average over the past years. This is quite good.

EPS 1Y (TTM)41.87%

EPS 3Y-3.52%

EPS 5Y11.94%

EPS Q2Q%231.82%

Revenue 1Y (TTM)39.16%

Revenue growth 3Y14.01%

Revenue growth 5Y9.34%

Sales Q2Q%13.42%

3.2 Future

DFS is expected to show a decrease in Earnings Per Share. In the coming years, the EPS will decrease by -0.72% yearly.

The Revenue is expected to grow by 2.79% on average over the next years.

EPS Next Y-13.85%

EPS Next 2Y-1.02%

EPS Next 3Y2.73%

EPS Next 5Y-0.72%

Revenue Next Year-1.45%

Revenue Next 2Y1.06%

Revenue Next 3Y2.77%

Revenue Next 5Y2.79%

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.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 10.00, the valuation of DFS can be described as very reasonable.

The rest of the industry has a similar Price/Earnings ratio as DFS.

DFS is valuated cheaply when we compare the Price/Earnings ratio to 28.29, which is the current average of the S&P500 Index.

With a Price/Forward Earnings ratio of 11.61, the valuation of DFS can be described as very reasonable.

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 (21.08), we can say DFS is valued slightly cheaper.

		Industry Rank	Sector Rank
PE	10
Fwd PE	11.61

4.2 Price Multiples

62.26% of the companies in the same industry are more expensive than DFS, based on the Price/Free Cash Flow ratio.

		Industry Rank	Sector Rank
P/FCF	4.92
EV/EBITDA	N/A

4.3 Compensation for Growth

PEG (NY)N/A

PEG (5Y)0.84

EPS Next 2Y-1.02%

EPS Next 3Y2.73%

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5. Dividend

5.1 Amount

DFS has a Yearly Dividend Yield of 1.75%.

DFS's Dividend Yield is comparable with the industry average which is at 4.87.

Compared to the average S&P500 Dividend Yield of 2.52, DFS is paying slightly less dividend.

		Industry Rank	Sector Rank
Dividend Yield	1.75%

5.2 History

The dividend of DFS is nicely growing with an annual growth rate of 11.46%!

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)11.46%

Div Incr Years14

Div Non Decr Years15

5.3 Sustainability

14.66% of the earnings are spent on dividend by DFS. This is a low number and sustainable payout ratio.

DP14.66%

EPS Next 2Y-1.02%

EPS Next 3Y2.73%

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DISCOVER FINANCIAL SERVICES

NYSE:DFS (4/17/2025, 8:13:32 PM)

After market: 159.63 0 (0%)

159.63

+3.32 (+2.12%)

Chartmill FA Rating

GICS SectorFinancials

GICS IndustryGroupFinancial Services

GICS IndustryConsumer Finance

Earnings (Last)01-22 2025-01-22/amc

Earnings (Next)04-23 2025-04-23/amc

Inst Owners85.15%

Inst Owner Change0.4%

Ins Owners0.21%

Ins Owner Change1.38%

Market Cap40.16B

Analysts72.38

Price Target216.61 (35.7%)

Short Float %2.12%

Short Ratio2.95

Dividend

		Industry Rank	Sector Rank
Dividend Yield	1.75%

Yearly Dividend3.08

Dividend Growth(5Y)11.46%

DP14.66%

Div Incr Years14

Div Non Decr Years15

Ex-Date02-20 2025-02-20 (0.7)

Surprises & Revisions

EPS beat(2)2

Avg EPS beat(2)31.23%

Min EPS beat(2)6.78%

Max EPS beat(2)55.67%

EPS beat(4)3

Avg EPS beat(4)23.63%

Min EPS beat(4)-63.13%

Max EPS beat(4)95.2%

EPS beat(8)3

Avg EPS beat(8)2.73%

EPS beat(12)6

Avg EPS beat(12)3.1%

EPS beat(16)8

Avg EPS beat(16)9.3%

Revenue beat(2)2

Avg Revenue beat(2)3.51%

Min Revenue beat(2)1.37%

Max Revenue beat(2)5.66%

Revenue beat(4)4

Avg Revenue beat(4)4.24%

Min Revenue beat(4)1.37%

Max Revenue beat(4)7.61%

Revenue beat(8)7

Avg Revenue beat(8)2.44%

Revenue beat(12)10

Avg Revenue beat(12)1.61%

Revenue beat(16)11

Avg Revenue beat(16)1.8%

PT rev (1m)-3.75%

PT rev (3m)23.53%

EPS NQ rev (1m)-0.16%

EPS NQ rev (3m)3.26%

EPS NY rev (1m)-0.72%

EPS NY rev (3m)6.6%

Revenue NQ rev (1m)-0.26%

Revenue NQ rev (3m)0.9%

Revenue NY rev (1m)-0.73%

Revenue NY rev (3m)-0.21%

Valuation

		Industry Rank	Sector Rank
PE	10
Fwd PE	11.61
P/S	1.82
P/FCF	4.92
P/OCF	4.77
P/B	2.24
P/tB	2.27
EV/EBITDA	N/A

EPS(TTM)15.96

EY10%

EPS(NY)13.75

Fwd EY8.61%

FCF(TTM)32.42

FCFY20.31%

OCF(TTM)33.48

OCFY20.98%

SpS87.72

BVpS71.25

TBVpS70.23

PEG (NY)N/A

PEG (5Y)0.84

Profitability

		Industry Rank	Sector Rank
ROA	3.56%
ROE	29.34%
ROCE	N/A
ROIC	N/A
ROICexc	N/A
ROICexgc	N/A
OM	N/A
PM (TTM)	23.83%
GM	N/A
FCFM	36.96%

ROA(3y)2.69%

ROA(5y)2.78%

ROE(3y)24.58%

ROE(5y)24.76%

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 3Y-17.54%

PM growth 5Y-0.44%

GM growth 3YN/A

GM growth 5YN/A

F-Score9

Asset Turnover0.15

Health

		Industry Rank	Sector Rank
Debt/Equity	0.53
Debt/FCF	1.93
Debt/EBITDA	N/A
Cap/Depr	89.33%
Cap/Sales	1.21%
Interest Coverage	N/A
Cash Conversion	N/A
Profit Quality	155.11%
Current Ratio	N/A
Quick Ratio	N/A
Altman-Z	N/A

F-Score9

WACC13.62%

ROIC/WACCN/A

Cap/Depr(3y)65.85%

Cap/Depr(5y)57.58%

Cap/Sales(3y)1.73%

Cap/Sales(5y)1.83%

Profit Quality(3y)216.26%

Profit Quality(5y)259.05%

High Growth Momentum

Growth

EPS 1Y (TTM)41.87%

EPS 3Y-3.52%

EPS 5Y11.94%

EPS Q2Q%231.82%

EPS Next Y-13.85%

EPS Next 2Y-1.02%

EPS Next 3Y2.73%

EPS Next 5Y-0.72%

Revenue 1Y (TTM)39.16%

Revenue growth 3Y14.01%

Revenue growth 5Y9.34%

Sales Q2Q%13.42%

Revenue Next Year-1.45%

Revenue Next 2Y1.06%

Revenue Next 3Y2.77%

Revenue Next 5Y2.79%

EBIT growth 1YN/A

EBIT growth 3YN/A

EBIT growth 5YN/A

EBIT Next YearN/A

EBIT Next 3YN/A

EBIT Next 5YN/A

FCF growth 1Y-1.25%

FCF growth 3Y11.88%

FCF growth 5Y6.65%

OCF growth 1Y-1.61%

OCF growth 3Y11.86%

OCF growth 5Y6.34%

DISCOVER FINANCIAL SERVICES (DFS) Stock Fundamental Analysis

1. Profitability

1.1 Basic Checks

1.2 Ratios

1.3 Margins

More info and screens

2. Health

2.1 Basic Checks

2.2 Solvency

2.3 Liquidity

More info and screens

3. Growth

3.1 Past

3.2 Future

3.3 Evolution

More info and screens

4. Valuation

4.1 Price/Earnings Ratio

4.2 Price Multiples

4.3 Compensation for Growth

More info and screens

5. Dividend

5.1 Amount

5.2 History

5.3 Sustainability

More info and screens