|Bid||74.58 x 1100|
|Ask||74.68 x 1200|
|Day's Range||73.64 - 74.70|
|52 Week Range||57.50 - 81.93|
|PE Ratio (TTM)||12.85|
|Forward Dividend & Yield||1.40 (1.88%)|
|1y Target Est||N/A|
Of 27 analysts that are covering Discover Financial Services (DFS) in June, nine recommend a “strong buy,” eight recommend a “hold,” and ten recommend a “buy” on the stock. Discover Financial didn’t have “strong sell” or “sell” ratings. The stock might witness a rise in favorable ratings due to the positive outlook and supportive macroeconomic factors.
Discover Financial Services (DFS) has a PE ratio of 9.19x on a next 12-month basis—compared to its peers’ average of 16.13x, which represents Discover Financial’s discounted valuations. Capital One Financial (COF), Visa (V), and American Express (AXP) have PE ratios of 9.14x, 26.25x, and 13.01x, respectively, on a next 12-month basis.
The payment services transaction volumes are mainly impacted by factors that are directly or indirectly related to spending patterns. Positive momentum in consumer confidence, increasing employment levels, and the stronger economy mainly contribute to higher spending among consumers. As a result, the second quarter is expected to be beneficial for Discover Financial Services (DFS) and Capital One Financial (COF). Retail loans are expected to witness a boost.
Discover Financial Services’ (DFS) Direct Banking segment generates most of its interest income from credit card loans. The division’s credit card loan growth mainly depends on global measures like employment levels and inflation. An increase in the employment levels would improve the purchasing power and the economy’s overall health, which would boost Discover Financial and Capital One Financial’s (COF) credit card loans.
In the June quarter, Discover Financial Services’ (DFS) performance and other consumer financial companies’ (IYF) performances, like Mastercard (MA) and Visa (V), could be driven by the increasing trend of digitization, global parameters that impact consumer spending, and increased oil prices. In the second quarter, Discover Financial is expected to benefit from a boost in consumer loans due to increased retail spending. Compared to the first quarter and the second quarter of 2017, Wall Street analysts expect Discover Financial to report a higher EPS in the second quarter.
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The Princeton, N.J.-based economic development professional also warned that transit is not the biggest issue threatening the region's recruiting efforts.
American Express’s (AXP) PE ratio stood at 13.47x on a next-12-month basis, reflecting its discounted valuation compared to the peer average of 21.33x.
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American Express (AXP) incurred total expenses amounting to $6.9 billion in the first quarter, implying a rise of 9% on a YoY (year-over-year) basis. The company incurred marketing and business-development expenses amounting to $1.34 billion in Q1 2018 compared to $1.28 billion in Q1 2017, reflecting a rise of 5%. Amex incurred cardmember rewards expenses amounting to $2.34 billion in Q1 2018 compared to $2.06 billion in Q1 2017, reflecting a rise of 14% YoY.
American Express (AXP) generates its revenue from net card fees, discount revenue, net interest income, other fees and commissions, and other revenue. In the first quarter, its discount revenue accounted for 60.5% of its total revenue (after deducting interest expenses).
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The performance of American Express’s (AXP) Global Merchant Services segment largely depends upon spending by end consumers and the discount rate the company charges to its merchants. Consumer spending primarily depends on the overall economic and business environment. American Express’s Global Merchant Services segment’s performance is also affected by higher unemployment rates, as this could restrict the growth of the economy, which would limit spending.
American Express’s (AXP) Global Commercial Services segment consists of US SME (small and medium-sized enterprises), international SME, and large and global corporate enterprises.
American Express’s (AXP) International Consumer and Network Services segment is affected by consumer spending levels. Global macroeconomic factors, along with business activities, play a vital role, as they directly affect consumer spending patterns. However, net card fees also affect the segment’s performance.
In the first quarter of 2018, American Express (AXP) posted EPS of $1.86, exceeding analysts’ expectations by $0.15 and reflecting a 38% rise YoY (year-over-year). Its competitor Discover Financial Services (DFS) posted EPS of $1.82 in the quarter.
Discover Financial Services has done well over the years to carve out a name for itself in the extremely competitive card and payments industry. As one of just four major credit card processing companies in the U.S., Discover’s share of the market is just a fraction of market leader Visa’s. However, as one of just two companies which provide end-to-end payment services to customers and merchants (American Express being the other), and given its sizable exposure in the student and personal loans industry, Discover has a strong value proposition – especially taking into account the new avenues that have opened up due to technological advancements in the payments and lending spaces over recent years. Discover’s steadily growing portfolio of credit card, student and private loans coupled with improving net interest margin figures will be the key drivers of value for the company in the future.
Discover Financial (DFS) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
The company’s competitors Visa (V), PayPal Holdings (PYPL), and Discover Financial Services (DFS) have PEs of 25.96x, 31.78x, and 9.56x, respectively, on a next-12-month basis. Mastercard has higher valuations primarily due to the positive outlook it has for the remainder of 2018. Moving forward, Mastercard will likely be positively impacted by the rising trend in digital transactions.
As we’ve discussed in this series, this year, Visa (V) is expected to be boosted by its business fundamentals, increased payment digitalization, and higher oil prices. Of the 36 analysts covering the payment giant’s stock, 15 (41.7%) recommend “strong buy,” 17 (47.2%) recommend “buy,” and four (11.1%) recommend “hold.”
Even though digital transactions take less time to complete, many economies still rely on cash for the execution of transactions.
Wall Street analysts have given Mastercard (MA) an average EPS estimate of $1.5 for the second quarter, reflecting a year-over-year rise.