DISCOVER FINANCIAL SERVICES (DFS) Stock Fundamental Analysis
NYSE:DFS - New York Stock Exchange, Inc. - US2547091080 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to DFS. DFS was compared to 52 industry peers in the Consumer Finance industry. Both the profitability and the financial health of DFS get a neutral evaluation. Nothing too spectacular is happening here. 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.
DFS had a positive operating cash flow in the past year.
Each year in the past 5 years DFS has been profitable.
In the past 5 years DFS always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 3.56%, DFS is in the better half of the industry, outperforming 71.15% of the companies in the same industry.
Looking at the Return On Equity, with a value of 29.34%, DFS belongs to the top of the industry, outperforming 88.46% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.56% | ||
| ROE | 29.34% | ||
| ROIC | N/A |
ROA(3y)2.69%
ROA(5y)2.78%
ROE(3y)24.58%
ROE(5y)24.76%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
Looking at the Profit Margin, with a value of 23.83%, DFS belongs to the top of the industry, outperforming 88.46% of the companies in the same industry.
DFS's Profit Margin has been stable in the last couple of years.
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) | 23.83% | ||
| GM | N/A |
OM growth 3YN/A
OM growth 5YN/A
PM growth 3Y-17.54%
PM growth 5Y-0.44%
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.
Compared to 1 year ago, DFS has more shares outstanding
The number of shares outstanding for DFS has been reduced compared to 5 years ago.
DFS has a better debt/assets ratio than last year.
2.2 Solvency
The Debt to FCF ratio of DFS is 1.93, which is an excellent value as it means it would take DFS, only 1.93 years of fcf income to pay off all of its debts.
DFS's Debt to FCF ratio of 1.93 is amongst the best of the industry. DFS outperforms 84.62% of its industry peers.
A Debt/Equity ratio of 0.53 indicates that DFS is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.53, DFS is in the better half of the industry, outperforming 73.08% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 1.93 | ||
| Altman-Z | N/A |
ROIC/WACCN/A
WACC12.93%
2.3 Liquidity
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | N/A | ||
| Quick Ratio | N/A |
3. Growth
3.1 Past
DFS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 117.90%, which is quite impressive.
Measured over the past years, DFS shows a quite strong growth in Earnings Per Share. The EPS has been growing by 11.94% on average per year.
DFS shows a strong growth in Revenue. In the last year, the Revenue has grown by 36.14%.
Measured over the past years, DFS shows a quite strong growth in Revenue. The Revenue has been growing by 9.34% on average per year.
EPS 1Y (TTM)117.9%
EPS 3Y-3.52%
EPS 5Y11.94%
EPS Q2Q%286.36%
Revenue 1Y (TTM)36.14%
Revenue growth 3Y14.01%
Revenue growth 5Y9.34%
Sales Q2Q%0.97%
3.2 Future
Based on estimates for the next years, DFS will show a decrease in Earnings Per Share. The EPS will decrease by -0.72% on average per year.
DFS is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 2.79% yearly.
EPS Next Y-13.85%
EPS Next 2Y-1.02%
EPS Next 3Y2.73%
EPS Next 5Y-0.72%
Revenue Next Year-1.62%
Revenue Next 2Y0.86%
Revenue Next 3Y2.37%
Revenue Next 5Y2.79%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
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 9.56, which indicates a very decent valuation of DFS.
DFS's Price/Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Earnings ratio of 28.88, DFS is valued rather cheaply.
With a Price/Forward Earnings ratio of 11.68, the valuation of DFS can be described as very reasonable.
DFS's Price/Forward Earnings is on the same level as the industry average.
The average S&P500 Price/Forward Earnings ratio is at 21.20. DFS is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.56 | ||
| Fwd PE | 11.68 |
4.2 Price Multiples
Compared to the rest of the industry, the Price/Free Cash Flow ratio of DFS is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 5.63 | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
PEG (NY)N/A
PEG (5Y)0.8
EPS Next 2Y-1.02%
EPS Next 3Y2.73%
5. Dividend
5.1 Amount
DFS has a Yearly Dividend Yield of 1.51%.
DFS's Dividend Yield is comparable with the industry average which is at 4.45.
Compared to the average S&P500 Dividend Yield of 2.45, DFS is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.51% |
5.2 History
The dividend of DFS is nicely growing with an annual growth rate of 11.46%!
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)11.46%
Div Incr Years14
Div Non Decr Years15
5.3 Sustainability
14.66% of the earnings are spent on dividend by DFS. This is a low number and sustainable payout ratio.
DP14.66%
EPS Next 2Y-1.02%
EPS Next 3Y2.73%
182.67
-2.7 (-1.46%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryConsumer Finance
Earnings (Last)
Earnings (Next)
Inst Owners85.15%
Inst Owner Change0.34%
Ins Owners0.21%
Ins Owner Change1.38%
Market Cap45.96B
Analysts72.38
Price Target204.65 (12.03%)
Short Float %1.76%
Short Ratio1.79
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.51% |
Yearly Dividend3.08
Dividend Growth(5Y)11.46%
DP14.66%
Div Incr Years14
Div Non Decr Years15
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)31.23%
Min EPS beat(2)6.78%
Max EPS beat(2)55.67%
EPS beat(4)3
Avg EPS beat(4)23.63%
Min EPS beat(4)-63.13%
Max EPS beat(4)95.2%
EPS beat(8)3
Avg EPS beat(8)2.73%
EPS beat(12)6
Avg EPS beat(12)3.1%
EPS beat(16)8
Avg EPS beat(16)9.3%
Revenue beat(2)2
Avg Revenue beat(2)3.51%
Min Revenue beat(2)1.37%
Max Revenue beat(2)5.66%
Revenue beat(4)4
Avg Revenue beat(4)4.24%
Min Revenue beat(4)1.37%
Max Revenue beat(4)7.61%
Revenue beat(8)7
Avg Revenue beat(8)2.44%
Revenue beat(12)10
Avg Revenue beat(12)1.61%
Revenue beat(16)11
Avg Revenue beat(16)1.8%
PT rev (1m)-9.06%
PT rev (3m)16.71%
EPS NQ rev (1m)-0.21%
EPS NQ rev (3m)3.26%
EPS NY rev (1m)-1.17%
EPS NY rev (3m)6.6%
Revenue NQ rev (1m)-0.26%
Revenue NQ rev (3m)0.9%
Revenue NY rev (1m)-0.9%
Revenue NY rev (3m)1.71%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.56 | ||
| Fwd PE | 11.68 | ||
| P/S | 2.08 | ||
| P/FCF | 5.63 | ||
| P/OCF | 5.46 | ||
| P/B | 2.56 | ||
| P/tB | 2.6 | ||
| EV/EBITDA | N/A |
EPS(TTM)19.11
EY10.46%
EPS(NY)15.64
Fwd EY8.56%
FCF(TTM)32.42
FCFY17.75%
OCF(TTM)33.48
OCFY18.33%
SpS87.72
BVpS71.25
TBVpS70.23
PEG (NY)N/A
PEG (5Y)0.8
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.56% | ||
| ROE | 29.34% | ||
| ROCE | N/A | ||
| ROIC | N/A | ||
| ROICexc | N/A | ||
| ROICexgc | N/A | ||
| OM | N/A | ||
| PM (TTM) | 23.83% | ||
| GM | N/A | ||
| FCFM | 36.96% |
ROA(3y)2.69%
ROA(5y)2.78%
ROE(3y)24.58%
ROE(5y)24.76%
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3YN/A
OM growth 5YN/A
PM growth 3Y-17.54%
PM growth 5Y-0.44%
GM growth 3YN/A
GM growth 5YN/A
F-Score9
Asset Turnover0.15
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 1.93 | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | 89.33% | ||
| Cap/Sales | 1.21% | ||
| Interest Coverage | N/A | ||
| Cash Conversion | N/A | ||
| Profit Quality | 155.11% | ||
| Current Ratio | N/A | ||
| Quick Ratio | N/A | ||
| Altman-Z | N/A |
F-Score9
WACC12.93%
ROIC/WACCN/A
Cap/Depr(3y)65.85%
Cap/Depr(5y)57.58%
Cap/Sales(3y)1.73%
Cap/Sales(5y)1.83%
Profit Quality(3y)216.26%
Profit Quality(5y)259.05%
High Growth Momentum
Growth
EPS 1Y (TTM)117.9%
EPS 3Y-3.52%
EPS 5Y11.94%
EPS Q2Q%286.36%
EPS Next Y-13.85%
EPS Next 2Y-1.02%
EPS Next 3Y2.73%
EPS Next 5Y-0.72%
Revenue 1Y (TTM)36.14%
Revenue growth 3Y14.01%
Revenue growth 5Y9.34%
Sales Q2Q%0.97%
Revenue Next Year-1.62%
Revenue Next 2Y0.86%
Revenue Next 3Y2.37%
Revenue Next 5Y2.79%
EBIT growth 1YN/A
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-1.25%
FCF growth 3Y11.88%
FCF growth 5Y6.65%
OCF growth 1Y-1.61%
OCF growth 3Y11.86%
OCF growth 5Y6.34%