DISCOVER FINANCIAL SERVICES (DFS)
US2547091080 - Common Stock
We assign a fundamental rating of 4 out of 10 to DFS. DFS was compared to 51 industry peers in the Consumer Finance industry. DFS has an average financial health and profitability rating. DFS is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year DFS was profitable.
In the past year DFS had a positive cash flow from operations.
DFS had positive earnings in each of the past 5 years.
DFS had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 1.89%, DFS is in line with its industry, outperforming 56.86% of the companies in the same industry.
DFS has a better Return On Equity (19.28%) than 84.31% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.89% | ||
| ROE | 19.28% | ||
| ROIC | N/A |
ROA(3y)3.33%
ROA(5y)2.7%
ROE(3y)29.69%
ROE(5y)24.75%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
With a decent Profit Margin value of 18.03%, DFS is doing good in the industry, outperforming 78.43% of the companies in the same industry.
In the last couple of years the Profit Margin of DFS has declined.
The Operating Margin and Gross Margin are not available for DFS so they could not be analyzed.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | N/A | ||
| PM (TTM) | 18.03% | ||
| GM | N/A |
OM growth 3YN/A
OM growth 5YN/A
PM growth 3Y21.88%
PM growth 5Y-6.41%
GM growth 3YN/A
GM growth 5YN/A
2. Health
2.1 Basic Checks
DFS does not have a ROIC to compare to the WACC, probably because it is not profitable.
DFS has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, DFS has less shares outstanding
Compared to 1 year ago, DFS has an improved debt to assets ratio.
2.2 Solvency
The Debt to FCF ratio of DFS is 2.46, which is a good value as it means it would take DFS, 2.46 years of fcf income to pay off all of its debts.
DFS has a better Debt to FCF ratio (2.46) than 82.35% of its industry peers.
DFS has a Debt/Equity ratio of 1.12. This is a high value indicating a heavy dependency on external financing.
DFS has a better Debt to Equity ratio (1.12) than 60.78% of its industry peers.
Although DFS does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.12 | ||
| Debt/FCF | 2.46 | ||
| Altman-Z | N/A |
ROIC/WACCN/A
WACC12.59%
2.3 Liquidity
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | N/A | ||
| Quick Ratio | N/A |
3. Growth
3.1 Past
DFS shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -27.37%.
Measured over the past 5 years, DFS shows a small growth in Earnings Per Share. The EPS has been growing by 7.57% on average per year.
The Revenue has grown by 18.92% in the past year. This is quite good.
Measured over the past years, DFS shows a quite strong growth in Revenue. The Revenue has been growing by 8.17% on average per year.
EPS 1Y (TTM)-27.37%
EPS 3Y46.34%
EPS 5Y7.57%
EPS growth Q2Q-59.15%
Revenue 1Y (TTM)18.92%
Revenue growth 3Y12.67%
Revenue growth 5Y8.17%
Revenue growth Q2Q12.43%
3.2 Future
DFS is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 4.98% yearly.
DFS is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 1.98% yearly.
EPS Next Y-1.71%
EPS Next 2Y9.67%
EPS Next 3Y8.8%
EPS Next 5Y4.98%
Revenue Next Year4.21%
Revenue Next 2Y2.22%
Revenue Next 3Y2.78%
Revenue Next 5Y1.98%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 11.56, which indicates a very decent valuation of DFS.
DFS's Price/Earnings is on the same level as the industry average.
The average S&P500 Price/Earnings ratio is at 25.20. DFS is valued rather cheaply when compared to this.
DFS is valuated reasonably with a Price/Forward Earnings ratio of 11.76.
The rest of the industry has a similar Price/Forward Earnings ratio as DFS.
DFS's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 21.60.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.56 | ||
| Fwd PE | 11.76 |
4.2 Price Multiples
DFS's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. DFS is cheaper than 60.78% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 3.94 | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
PEG (NY)N/A
PEG (5Y)1.53
EPS Next 2Y9.67%
EPS Next 3Y8.8%
5. Dividend
5.1 Amount
DFS has a Yearly Dividend Yield of 2.21%. Purely for dividend investing, there may be better candidates out there.
DFS's Dividend Yield is a higher than the industry average which is at 4.32.
Compared to an average S&P500 Dividend Yield of 2.45, DFS has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.21% |
5.2 History
On average, the dividend of DFS grows each year by 12.65%, which is quite nice.
DFS has been paying a dividend for at least 10 years, so it has a reliable track record.
DFS has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)12.65%
Div Incr Years13
Div Non Decr Years14
5.3 Sustainability
26.30% of the earnings are spent on dividend by DFS. This is a low number and sustainable payout ratio.
DFS's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP26.3%
EPS Next 2Y9.67%
EPS Next 3Y8.8%
DISCOVER FINANCIAL SERVICES
NYSE:DFS (4/24/2024, 1:21:04 PM)
130.01
+0.77 (+0.6%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryConsumer Finance
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap32.58B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.21% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
Max EPS beat(2)
EPS beat(4)
Avg EPS beat(4)
Min EPS beat(4)
Max EPS beat(4)
EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
Avg EPS beat(12)
EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
Max Revenue beat(2)
Revenue beat(4)
Avg Revenue beat(4)
Min Revenue beat(4)
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Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
Avg Revenue beat(12)
Revenue beat(16)
Avg Revenue beat(16)
PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.56 | ||
| Fwd PE | 11.76 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)N/A
PEG (5Y)1.53
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.89% | ||
| ROE | 19.28% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | N/A | ||
| PM (TTM) | 18.03% | ||
| GM | N/A | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.1
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.12 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | N/A | ||
| Quick Ratio | N/A | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)-27.37%
EPS 3Y46.34%
EPS 5Y
EPS growth Q2Q
EPS Next Y-1.71%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)18.92%
Revenue growth 3Y12.67%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y