Discover Financial Services (DFS) – Investment Analysts’ Recent Ratings Updates

Discover Financial Services (NYSE: DFS) recently received a number of ratings updates from brokerages and research firms:

  • 11/1/2018 – Discover Financial Services was downgraded by analysts at ValuEngine from a “hold” rating to a “sell” rating.
  • 11/1/2018 – Discover Financial Services had its price target lowered by analysts at Citigroup Inc from $78.00 to $75.00. They now have a “neutral” rating on the stock.
  • 10/26/2018 – Discover Financial Services had its price target lowered by analysts at Wells Fargo & Co from $82.00 to $78.00. They now have a “market perform” rating on the stock.
  • 10/16/2018 – Discover Financial Services was downgraded by analysts at Zacks Investment Research from a “buy” rating to a “hold” rating. According to Zacks, “Discover Financial’s shares have gained against its industry’s decline in a year’s time. Moreover, it has witnessed its 2018 and 2019 earnings estimates move upward over the past 30 days. The company is well-poised for long-term growth on the back of a consistent rise in revenues. Its strong Direct Banking business has significantly supported the top line. The loan and Payment Services transaction dollar volume growth also look promising. Card sales have been soaring over the past many years. Its efficient capital management is also impressive. However, the company has been incurring considerable expenses in order to compete with other credit card issuers, attract and retain customers as well as increase the card usage from the past quarters. Rising expenses and increase in debt level have been weighing on the company’s margins.”
  • 10/5/2018 – Discover Financial Services was upgraded by analysts at Zacks Investment Research from a “hold” rating to a “buy” rating. They now have a $87.00 price target on the stock. According to Zacks, “Discover Financial’s shares have gained against its industry’s decline in a year’s time. Moreover, it has witnessed its 2018 and 2019 earnings estimates move upward over the past 30 days. The company is well-poised for long-term growth on the back of a consistent rise in revenues. Its strong Direct Banking business has significantly supported the top line. The loan and Payment Services transaction dollar volume growth also look promising. Card sales have been soaring over the past many years. Its efficient capital management is also impressive. However, the company has been incurring considerable expenses in order to compete with other credit card issuers, attract and retain customers as well as increase the card usage from the past quarters. Rising expenses and increase in debt level have been weighing on the company’s margins.”
  • 10/4/2018 – Discover Financial Services was downgraded by analysts at Zacks Investment Research from a “buy” rating to a “hold” rating. According to Zacks, “Discover Financial’s shares have gained against its industry’s decline in a year’s time. Moreover, it has witnessed its 2018 and 2019 earnings estimates move upward over the past 30 days. The company is well-poised for long-term growth on the back of a consistent rise in revenues. Its strong Direct Banking business has significantly supported the top line. The loan and Payment Services transaction dollar volume growth also look promising. Card sales have been soaring over the past many years. Its efficient capital management is also impressive. However, the company has been incurring considerable expenses in order to compete with other credit card issuers, attract and retain customers as well as increase the card usage from the past quarters. Rising expenses and increase in debt level have been weighing on the company’s margins.”
  • 10/2/2018 – Discover Financial Services was upgraded by analysts at JPMorgan Chase & Co. from a “neutral” rating to an “overweight” rating.
  • 10/1/2018 – Discover Financial Services had its price target raised by analysts at Wells Fargo & Co from $76.00 to $82.00. They now have a “market perform” rating on the stock.
  • 9/26/2018 – Discover Financial Services was upgraded by analysts at Zacks Investment Research from a “hold” rating to a “buy” rating. They now have a $88.00 price target on the stock. According to Zacks, “Discover Financial’s shares have outperformed its industry’s growth in a year’s time. Moreover, it has witnessed its 2018 and 2019 earnings estimates move upward over the past seven days. The company is well-poised for long-term growth on the back of a consistent rise in revenues. Its strong Direct Banking business has significantly supported the top line. The loan and Payment Services transaction dollar volume growth also look promising. Card sales have been soaring over the past many years. Its efficient capital management is also impressive. However, the company has been incurring considerable expenses in order to compete with other credit card issuers, attract and retain customers as well as increase the card usage from the past quarters. Rising expenses and increase in debt level have been weighing on the company’s margins.”
  • 9/21/2018 – Discover Financial Services had its price target raised by analysts at Bank of America Corp from $86.00 to $92.00. They now have a “buy” rating on the stock.

Shares of Discover Financial Services stock traded up $0.39 during trading hours on Tuesday, reaching $69.57. The company’s stock had a trading volume of 2,467,527 shares, compared to its average volume of 2,102,932. The company has a debt-to-equity ratio of 2.58, a quick ratio of 1.48 and a current ratio of 1.48. Discover Financial Services has a one year low of $63.31 and a one year high of $81.93. The company has a market cap of $23.09 billion, a P/E ratio of 11.63, a PEG ratio of 0.70 and a beta of 1.50.

Discover Financial Services (NYSE:DFS) last posted its quarterly earnings results on Thursday, October 25th. The financial services provider reported $2.05 earnings per share (EPS) for the quarter, hitting the Zacks’ consensus estimate of $2.05. Discover Financial Services had a net margin of 19.51% and a return on equity of 25.49%. The company had revenue of $2.72 billion for the quarter, compared to the consensus estimate of $2.69 billion. As a group, sell-side analysts predict that Discover Financial Services will post 7.83 earnings per share for the current year.

The firm also recently declared a quarterly dividend, which will be paid on Thursday, December 6th. Stockholders of record on Wednesday, November 21st will be given a $0.40 dividend. The ex-dividend date of this dividend is Tuesday, November 20th. This represents a $1.60 dividend on an annualized basis and a dividend yield of 2.30%. Discover Financial Services’s payout ratio is currently 26.76%.

In other news, SVP Edward W. Mcgrogan sold 850 shares of the firm’s stock in a transaction dated Thursday, November 1st. The shares were sold at an average price of $70.00, for a total value of $59,500.00. Following the transaction, the senior vice president now directly owns 12,075 shares in the company, valued at approximately $845,250. The transaction was disclosed in a legal filing with the SEC, which is available at this link. Also, EVP Carlos Minetti sold 3,750 shares of the firm’s stock in a transaction dated Thursday, November 1st. The stock was sold at an average price of $69.79, for a total transaction of $261,712.50. Following the completion of the transaction, the executive vice president now owns 126,352 shares in the company, valued at $8,818,106.08. The disclosure for this sale can be found here. Over the last 90 days, insiders sold 102,100 shares of company stock worth $7,656,625. Insiders own 0.81% of the company’s stock.

Several hedge funds have recently added to or reduced their stakes in DFS. Bank of America Corp DE increased its holdings in shares of Discover Financial Services by 7.5% in the 2nd quarter. Bank of America Corp DE now owns 1,844,422 shares of the financial services provider’s stock worth $129,865,000 after acquiring an additional 129,286 shares during the period. Glen Harbor Capital Management LLC increased its holdings in shares of Discover Financial Services by 61.3% in the 2nd quarter. Glen Harbor Capital Management LLC now owns 247,282 shares of the financial services provider’s stock worth $17,411,000 after acquiring an additional 93,942 shares during the period. Salem Investment Counselors Inc. increased its holdings in shares of Discover Financial Services by 1.7% in the 2nd quarter. Salem Investment Counselors Inc. now owns 54,849 shares of the financial services provider’s stock worth $3,862,000 after acquiring an additional 925 shares during the period. Atria Investments LLC increased its holdings in shares of Discover Financial Services by 19.7% in the 3rd quarter. Atria Investments LLC now owns 12,551 shares of the financial services provider’s stock worth $960,000 after acquiring an additional 2,069 shares during the period. Finally, Alps Advisors Inc. increased its holdings in shares of Discover Financial Services by 356.3% in the 2nd quarter. Alps Advisors Inc. now owns 17,863 shares of the financial services provider’s stock worth $1,258,000 after acquiring an additional 13,948 shares during the period. 85.66% of the stock is currently owned by institutional investors and hedge funds.

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 individuals; and other consumer products and services, including private student loans, personal loans, home equity loans, and other consumer lending, as well as deposit products, such as certificates of deposit, money market accounts, savings accounts, checking accounts, and individual retirement arrangement certificates of deposit.

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