Now trading at a price of $133.8, Discover Financial Services has moved 2.4% so far today.
Discover Financial Services returned gains of 45.4% last year, with its stock price reaching a high of $147.61 and a low of $79.04. Over the same period, the stock outperformed the S&P 500 index by 19.1%. More recently, the company's 50-day average price was $131.08. Discover Financial Services, through its subsidiaries, provides digital banking products and services, and payment services in the United States. Based in Riverwoods, IL, the Large-Cap Finance company has 21,100 full time employees. Discover Financial Services has offered a 2.1% dividend yield over the last 12 months.
EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $10,893 | $11,993 | $11,095 | $10,651 | $12,864 | $17,845 |
| Interest Income (M) | $8,754 | $9,463 | $9,230 | $9,517 | $10,999 | $13,099 |
| Operating Margins | 33% | 32% | 13% | 66% | 44% | 21% |
| Net Margins | 25% | 25% | 10% | 51% | 34% | 16% |
| Net Income (M) | $2,742 | $2,957 | $1,125 | $5,422 | $4,374 | $2,940 |
| Depreciation & Amort. (M) | $435 | $436 | $485 | $531 | $561 | $458 |
| Diluted Shares (M) | 345 | 320 | 307 | 300 | 278 | 254 |
| Earnings Per Share | $7.79 | $9.08 | $3.6 | $17.74 | $15.44 | $11.26 |
| EPS Growth | n/a | 16.56% | -60.35% | 392.78% | -12.97% | -27.07% |
| Avg. Price | $65.79 | $71.06 | $55.61 | $108.44 | $108.52 | $133.8 |
| P/E Ratio | 8.42 | 7.82 | 15.45 | 6.11 | 7.02 | 11.87 |
| Free Cash Flow (M) | $4,937 | $5,912 | $5,935 | $5,825 | $6,904 | $8,260 |
| CAPEX (M) | $254 | $284 | $261 | $194 | $236 | $303 |
| EV / EBITDA | 9.24 | 9.86 | 12.93 | 5.69 | 6.72 | 10.26 |
| Total Debt (M) | $27,228 | $25,701 | $21,241 | $18,477 | $20,108 | $20,581 |
| Net Debt / EBITDA | 3.45 | 4.4 | 4.0 | 1.29 | 1.79 | 2.08 |
Discover Financial Services has generally positive cash flows, growing revenues and a flat capital expenditure trend, and reasonable leverage levels. However, the firm has EPS growth achieved by reducing the number of outstanding shares. Finally, we note that Discover Financial Services has decent operating margins with a negative growth trend.
Discover Financial Services Is Fairly Priced at Current Levels:
Discover Financial Services has a trailing twelve month P/E ratio of 11.6, compared to an average of 19.48 for the Finance sector. Based on its EPS guidance of $12.9, the company has a forward P/E ratio of 10.2. The 7.5% compound average growth rate of Discover Financial Services's historical and projected earnings per share yields a PEG ratio of 1.55. This suggests that these shares are overvalued. Furthermore, Discover Financial Services is likely overvalued compared to the book value of its equity, since its P/B ratio of 2.24 is higher than the sector average of 1.85. The company's shares are currently trading 10.0% below their Graham number.
Discover Financial Services Has an Average Rating of Hold:
The 11 analysts following Discover Financial Services have set target prices ranging from $118.0 to $170.0 per share, for an average of $148.55 with a hold rating. The company is trading -9.9% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Discover Financial Services has a very low short interest because 1.4% of the company's shares are sold short. Institutions own 86.7% of the company's shares, and the insider ownership rate stands at 0.57%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 12% stake in the company is worth $4,080,937,423.
