NYSE:DFS

Stock Analysis Report

Executive Summary

Discover Financial Services, through its subsidiaries, operates as a direct banking and payment services company in the United States.

Snowflake

Fundamentals

Established dividend payer and fair value.


Similar Companies

Share Price & News

How has Discover Financial Services's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

2.4%

DFS

2.9%

US Consumer Finance

1.8%

US Market


1 Year Return

4.2%

DFS

6.8%

US Consumer Finance

7.3%

US Market

Return vs Industry: DFS underperformed the US Consumer Finance industry which returned 6.8% over the past year.

Return vs Market: DFS underperformed the US Market which returned 7.3% over the past year.


Shareholder returns

DFSIndustryMarket
7 Day2.4%2.9%1.8%
30 Day-6.0%-3.4%-0.7%
90 Day-3.1%-4.8%0.06%
1 Year6.5%4.2%8.7%6.8%9.7%7.3%
3 Year52.3%43.1%55.7%48.2%46.3%36.9%
5 Year40.6%27.1%41.7%31.3%64.5%46.5%

Price Volatility Vs. Market

How volatile is Discover Financial Services's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Discover Financial Services undervalued compared to its fair value and its price relative to the market?

40.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Undervalued: DFS ($79.23) is trading below our estimate of fair value ($134.11)

Significantly Undervalued: DFS is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: DFS is poor value based on its PE Ratio (9.3x) compared to the Consumer Finance industry average (8.4x).

PE vs Market: DFS is good value based on its PE Ratio (9.3x) compared to the US market (17.7x).


Price to Earnings Growth Ratio

Low PEG Ratio: DFS is poor value based on its PEG Ratio (12.5x)


Price to Book Ratio

PB vs Industry: DFS is overvalued based on its PB Ratio (2.3x) compared to the US Consumer Finance industry average (1.2x).


Next Steps

Future Growth

How is Discover Financial Services forecast to perform in the next 1 to 3 years based on estimates from 19 analysts?

0.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: DFS's forecast earnings growth (0.7% per year) is below the savings rate (2.7%).

Earnings vs Market: DFS's earnings (0.7% per year) are forecast to grow slower than the US market (14.6% per year).

High Growth Earnings: DFS's earnings are forecast to grow, but not significantly.

Revenue vs Market: DFS's revenue (6.4% per year) is forecast to grow slower than the US market (7.3% per year).

High Growth Revenue: DFS's revenue (6.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: DFS's Return on Equity is forecast to be high in 3 years time (24.8%)


Next Steps

Past Performance

How has Discover Financial Services performed over the past 5 years?

2.4%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: DFS's earnings have grown by 2.4% per year over the past 5 years.

Accelerating Growth: DFS's earnings growth over the past year (25.5%) exceeds its 5-year average (2.4% per year).

Earnings vs Industry: DFS earnings growth over the past year (25.5%) underperformed the Consumer Finance industry 25.5%.


Return on Equity

High ROE: Whilst DFS's Return on Equity (25.11%) is high, this metric is skewed due to their high level of debt.


Return on Assets

ROA vs Industry: DFS's Return on Assets is below or equal to the Consumer Finance industry average last year.


Return on Capital Employed

ROCE Improving: Insufficient data to calculate DFS's Return on Capital Employed to determine if it has improved over the past 3 years.


Next Steps

Financial Health

How is Discover Financial Services's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: DFS has a low level of unsold assets or inventory.

Debt Coverage by Assets: DFS's debt is covered by short term assets (assets are 3.957380x debt).


Financial Institutions Analysis

Asset Level: DFS's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if DFS has a sufficient allowance for bad loans.

Low Risk Liabilities: DFS reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if DFS has an acceptable proportion of non-loan assets held.

Low Risk Deposits: DFS has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if DFS has an appropriate level of bad loans.


Next Steps

Dividend

What is Discover Financial Services's current dividend yield, its reliability and sustainability?

2.22%

Current Dividend Yield


Dividend Yield vs Market

company2.2%marketbottom25%1.5%markettop25%3.7%industryaverage1.9%forecastin3Years2.2%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: DFS's dividend (2.22%) is higher than the bottom 25% of dividend payers in the US market (1.45%).

High Dividend: DFS's dividend (2.22%) is low compared to the top 25% of dividend payers in the US market (3.72%).

Stable Dividend: DFS's dividends per share have been stable in the past 10 years.

Growing Dividend: DFS's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (18.7%), DFS's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: DFS's dividends in 3 years are forecast to be well covered by earnings (18.7% payout ratio).


Next Steps

Management

What is the CEO of Discover Financial Services's salary, the management and board of directors tenure and is there insider trading?

3.8yrs

Average management tenure


CEO

Roger Hochschild (54yo)

1yrs

Tenure

US$5,664,102

Compensation

Mr. Roger Crosby Hochschild serves as the President and Chief Executive Officer for Discover Financial Services Since 1st October, 2018 and serves as Director, Chief Executive Officer and President at Disc ...


CEO Compensation Analysis

Compensation vs. Market: Roger has recently become CEO, making it difficult to compare their total compensation against companies of similar size in the US market.

Compensation vs Earnings: Roger's compensation has been consistent with company performance over the past year.


Management Age and Tenure

3.8yrs

Average Tenure

55yo

Average Age

Experienced Management: DFS's management team is considered experienced (3.8 years average tenure).


Board Age and Tenure

10.9yrs

Average Tenure

62.5yo

Average Age

Experienced Board: DFS's board of directors are seasoned and experienced ( 10.9 years average tenure).


Insider Trading

Insider Buying: DFS insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$82,68707 Aug 19
Mary Bush
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares993
Max PriceUS$83.27
SellUS$1,835,20029 Jul 19
Diane Offereins
EntityIndividual
Role
Senior Key Executive
Executive VP & President of Payment Services
Shares20,000
Max PriceUS$91.76
SellUS$441,49326 Jul 19
R. Graf
EntityIndividual
Role
Senior Key Executive
Executive Advisor
Shares4,776
Max PriceUS$92.44
SellUS$174,91126 Jul 19
Edward McGrogan
EntityIndividual
Role
Chief Accounting Officer
Chief Accounting Officer
Shares1,894
Max PriceUS$92.35
SellUS$38,45517 May 19
Mary Bush
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares496
Max PriceUS$77.53
SellUS$325,67307 May 19
Kathryn Corley
EntityIndividual
Shares4,762
Max PriceUS$68.39
SellUS$161,83707 May 19
Michael Moskow
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares1,985
Max PriceUS$81.53
SellUS$648,96002 May 19
Julie Loeger
EntityIndividual
Role
Senior Key Executive
Executive VP & President of US Cards
Shares8,000
Max PriceUS$81.12
SellUS$581,47002 May 19
Daniel Capozzi
EntityIndividual
Shares7,146
Max PriceUS$81.37
SellUS$2,518,30301 May 19
R. Graf
EntityIndividual
Role
Senior Key Executive
Executive Advisor
Shares30,741
Max PriceUS$81.92
SellUS$199,92001 May 19
Edward McGrogan
EntityIndividual
Role
Chief Accounting Officer
Chief Accounting Officer
Shares2,450
Max PriceUS$81.60
SellUS$453,67001 May 19
Cynthia Glassman
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares5,550.84
Max PriceUS$81.73
SellUS$553,44006 Feb 19
Glenn Schneider
EntityIndividual
Role
Chief Information Officer
Executive VP & Chief Information Officer
Shares8,000
Max PriceUS$69.18
BuyUS$2,000,22729 Jan 19
Roger Hochschild
EntityIndividual
Role
Chief Executive Officer
CEO, President & Director
Shares30,000
Max PriceUS$67.04
SellUS$142,46014 Nov 18
Cynthia Glassman
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,000
Max PriceUS$71.23
SellUS$139,00008 Nov 18
Cynthia Glassman
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,000
Max PriceUS$69.50
SellUS$59,50002 Nov 18
Edward McGrogan
EntityIndividual
Role
Chief Accounting Officer
Chief Accounting Officer
Shares850
Max PriceUS$70.00

Ownership Breakdown


Management Team

  • Craig Streem (69yo)

    Vice President of Investor Relations

    • Tenure: 0yrs
  • Roger Hochschild (54yo)

    CEO, President & Director

    • Tenure: 1yrs
    • Compensation: US$5.66m
  • R. Graf (55yo)

    Executive Advisor

    • Tenure: 0.08yrs
    • Compensation: US$3.77m
  • Edward McGrogan

    Chief Accounting Officer

    • Tenure: 6.8yrs
  • Carlos Minetti (56yo)

    Executive VP & President of Consumer Banking

    • Tenure: 5.7yrs
    • Compensation: US$3.72m
  • Diane Offereins (61yo)

    Executive VP & President of Payment Services

    • Tenure: 9.5yrs
    • Compensation: US$3.89m
  • Glenn Schneider (57yo)

    Executive VP & Chief Information Officer

    • Tenure: 4.8yrs
  • Julie Loeger (55yo)

    Executive VP & President of US Cards

    • Tenure: 3.8yrs
    • Compensation: US$3.47m
  • John Greene (53yo)

    Executive VP & CFO

    • Tenure: 0.08yrs
  • Andy Eichfeld (49yo)

    Executive VP

    • Tenure: 1.1yrs

Board Members

  • Larry Weinbach (79yo)

    Independent Chairman

    • Tenure: 0.8yrs
    • Compensation: US$354.94k
  • Mary Bush (71yo)

    Independent Director

    • Tenure: 12.3yrs
    • Compensation: US$264.94k
  • Roger Hochschild (54yo)

    CEO, President & Director

    • Tenure: 1yrs
    • Compensation: US$5.66m
  • Jeff Aronin (51yo)

    Independent Director

    • Tenure: 12.3yrs
    • Compensation: US$249.94k
  • Peer Thierer (59yo)

    Independent Director

    • Tenure: 6.5yrs
    • Compensation: US$249.94k
  • Tom Maheras (56yo)

    Independent Director

    • Tenure: 11.1yrs
    • Compensation: US$259.94k
  • Greg Case (56yo)

    Independent Director

    • Tenure: 12.3yrs
    • Compensation: US$265.00k
  • Michael Moskow (81yo)

    Independent Director

    • Tenure: 12.1yrs
    • Compensation: US$269.94k
  • Cyndi Glassman (71yo)

    Independent Director

    • Tenure: 10.7yrs
    • Compensation: US$269.94k
  • Candace Duncan (66yo)

    Independent Director

    • Tenure: 5.4yrs
    • Compensation: US$263.27k

Company Information

Discover Financial Services's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Discover Financial Services
  • Ticker: DFS
  • Exchange: NYSE
  • Founded: 1986
  • Industry: Consumer Finance
  • Sector: Diversified Financials
  • Market Cap: US$25.214b
  • Shares outstanding: 318.24m
  • Website: https://www.discover.com

Number of Employees


Location

  • Discover Financial Services
  • 2500 Lake Cook Road
  • Riverwoods
  • Illinois
  • 60015
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
DFSNYSE (New York Stock Exchange)YesCommon StockUSUSDJun 2007
DC7DB (Deutsche Boerse AG)YesCommon StockDEEURJun 2007
0IBCLSE (London Stock Exchange)YesCommon StockGBUSDJun 2007
DFS *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJun 2007

Biography

Discover Financial Services, through its subsidiaries, operates as a direct banking and payment services company in the United States. The Direct Banking segment offers Discover-branded credit cards to ind ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/18 00:04
End of Day Share Price2019/10/17 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.