Discover Financial Services Anticipates Strong Earnings; Analysts Bullish on Stock
Discover Financial Services (DFS), based in Riverwoods, Illinois, is a key player in digital banking and payment services. With a market capitalization of $43.5 billion, the company offers a range of financial products including checking and savings accounts, certificates of deposit, and various types of loans. DFS is set to release its fiscal fourth-quarter earnings for 2024 on Wednesday, January 22, after the market closes.
Expectations for Earnings Growth
Analysts project that DFS will report earnings of $2.83 per share on a diluted basis, marking an 83.8% increase from $1.54 per share in the same quarter last year. Notably, the company has exceeded analyst expectations in two of the last four quarters, while it has fallen short in the other two.
Outlook for the Fiscal Year
For the entire fiscal year, analysts are predicting an earnings per share (EPS) of $13.70 for DFS, which reflects a 21.7% increase compared to the $11.26 EPS reported in fiscal 2023. However, there is an anticipated decline in EPS to $12.84 in fiscal 2025, representing a 6.3% year-over-year drop.
Stock Performance Against Major Indices
Over the past year, DFS stock has outpaced the S&P 500’s 23.3% gain, soaring by 54.1%. Similarly, it has outperformed the Financial Select Sector SPDR Fund (XLF), which gained 28.5% during the same period.
Factors Driving Success
The impressive stock performance can be attributed to a favorable interest rate environment, anticipation of an upcoming acquisition, modest loan growth, and improved credit conditions.
Recent Earnings Surpass Expectations
On October 16, DFS announced its Q3 results, leading to a 2% increase in shares the following trading session. The reported EPS of $3.69 topped Wall Street’s expectations of $3.28, while revenue reached $4.5 billion, exceeding the forecast of $4.4 billion.
Analyst Ratings and Future Price Targets
Market analysts hold a moderately bullish outlook on DFS stock, giving it a “Moderate Buy” rating overall. Among 14 analysts monitoring the stock, three recommend a “Strong Buy,” one suggests a “Moderate Buy,” and ten give a “Hold.” The average price target from analysts stands at $174.54, indicating slight potential upside from current levels.
On the date of publication,
Neha Panjwani
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
