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DISCOVER FINANCIAL SERVICES (DFS) Stock Fundamental Analysis

NYSE:DFS - New York Stock Exchange, Inc. - US2547091080 - Common Stock - Currency: USD

200.05  -0.43 (-0.21%)

After market: 198.1 -1.95 (-0.97%)

Fundamental Rating

4

Overall DFS gets a fundamental rating of 4 out of 10. We evaluated DFS against 52 industry peers in the Consumer Finance industry. DFS has an average financial health and profitability rating. While showing a medium growth rate, DFS is valued expensive at the moment.


Dividend Valuation Growth Profitability Health

4

1. Profitability

1.1 Basic Checks

DFS had positive earnings in the past year.
DFS had a positive operating cash flow in the past year.
In the past 5 years DFS has always been profitable.
In the past 5 years DFS always reported a positive cash flow from operatings.
DFS Yearly Net Income VS EBIT VS OCF VS FCFDFS Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2B 4B 6B 8B

1.2 Ratios

DFS has a better Return On Assets (3.73%) than 73.08% of its industry peers.
With an excellent Return On Equity value of 29.08%, DFS belongs to the best of the industry, outperforming 90.38% of the companies in the same industry.
Industry RankSector Rank
ROA 3.73%
ROE 29.08%
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
DFS Yearly ROA, ROE, ROICDFS Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 10 20 30

1.3 Margins

With an excellent Profit Margin value of 24.89%, DFS belongs to the best 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.
DFS does not have Operating Margin and Gross Margin available, so we won't be analyzing them here.
Industry RankSector Rank
OM N/A
PM (TTM) 24.89%
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
DFS Yearly Profit, Operating, Gross MarginsDFS Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 10 20 30 40

4

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 more shares outstanding than it did 1 year ago.
The number of shares outstanding for DFS has been reduced compared to 5 years ago.
The debt/assets ratio for DFS has been reduced compared to a year ago.
DFS Yearly Shares OutstandingDFS Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 100M 200M 300M 400M
DFS Yearly Total Debt VS Total AssetsDFS Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 50B 100B 150B

2.2 Solvency

DFS has a debt to FCF ratio of 1.66. This is a very positive value and a sign of high solvency as it would only need 1.66 years to pay back of all of its debts.
DFS has a better Debt to FCF ratio (1.66) than 86.54% of its industry peers.
DFS has a Debt/Equity ratio of 0.53. This is a neutral value indicating DFS is somewhat dependend on debt financing.
The Debt to Equity ratio of DFS (0.53) is better than 73.08% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.53
Debt/FCF 1.66
Altman-Z N/A
ROIC/WACCN/A
WACC13.22%
DFS Yearly LT Debt VS Equity VS FCFDFS Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 5B 10B 15B 20B

2.3 Liquidity

Industry RankSector Rank
Current Ratio N/A
Quick Ratio N/A
DFS Yearly Current Assets VS Current LiabilitesDFS Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2B 4B 6B 8B 10B

5

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.
DFS shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 11.94% yearly.
The Revenue has grown by 36.14% in the past year. This is a very strong growth!
DFS shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 9.34% yearly.
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

The Earnings Per Share is expected to decrease by -0.72% on average over the next years.
The Revenue is expected to grow by 2.79% on average over the next years.
EPS Next Y-8.36%
EPS Next 2Y0.39%
EPS Next 3Y4.38%
EPS Next 5Y-0.72%
Revenue Next Year-0.89%
Revenue Next 2Y1.36%
Revenue Next 3Y2.03%
Revenue Next 5Y2.79%

3.3 Evolution

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
DFS Yearly Revenue VS EstimatesDFS Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 5B 10B 15B 20B
DFS Yearly EPS VS EstimatesDFS Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 5 10 15

3

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 10.47, the valuation of DFS can be described as reasonable.
DFS's Price/Earnings ratio is in line with the industry average.
DFS is valuated cheaply when we compare the Price/Earnings ratio to 26.60, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 12.44, which indicates a correct valuation of DFS.
DFS's Price/Forward Earnings is on the same level as the industry average.
DFS's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 22.43.
Industry RankSector Rank
PE 10.47
Fwd PE 12.44
DFS Price Earnings VS Forward Price EarningsDFS Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 5 10 15 20 25

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 RankSector Rank
P/FCF 5.95
EV/EBITDA N/A
DFS Per share dataDFS EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 20 40 60 80

4.3 Compensation for Growth

PEG (NY)N/A
PEG (5Y)0.88
EPS Next 2Y0.39%
EPS Next 3Y4.38%

5

5. Dividend

5.1 Amount

DFS has a Yearly Dividend Yield of 1.40%.
DFS's Dividend Yield is comparable with the industry average which is at 4.27.
With a Dividend Yield of 1.40, DFS pays less dividend than the S&P500 average, which is at 2.36.
Industry RankSector Rank
Dividend Yield 1.4%

5.2 History

On average, the dividend of DFS grows each year by 11.46%, 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)11.46%
Div Incr Years14
Div Non Decr Years15
DFS Yearly Dividends per shareDFS Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0.5 1 1.5 2 2.5

5.3 Sustainability

DFS pays out 13.98% of its income as dividend. This is a sustainable payout ratio.
DP13.98%
EPS Next 2Y0.39%
EPS Next 3Y4.38%
DFS Yearly Income VS Free CF VS DividendDFS Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2B 4B 6B 8B
DFS Dividend Payout.DFS Dividend Payout, showing the Payout Ratio.DFS Dividend Payout.PayoutRetained Earnings

DISCOVER FINANCIAL SERVICES

NYSE:DFS (5/16/2025, 8:04:00 PM)

After market: 198.1 -1.95 (-0.97%)

200.05

-0.43 (-0.21%)

Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryConsumer Finance
Earnings (Last)04-23 2025-04-23/amc
Earnings (Next)07-15 2025-07-15/amc
Inst Owners85.15%
Inst Owner Change-1.49%
Ins Owners0.21%
Ins Owner Change1.38%
Market Cap50.33B
Analysts72.38
Price Target204 (1.97%)
Short Float %2.17%
Short Ratio2.19
Dividend
Industry RankSector Rank
Dividend Yield 1.4%
Yearly Dividend3.08
Dividend Growth(5Y)11.46%
DP13.98%
Div Incr Years14
Div Non Decr Years15
Ex-Date05-23 2025-05-23 (0.7)
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)40.29%
Min EPS beat(2)24.9%
Max EPS beat(2)55.67%
EPS beat(4)4
Avg EPS beat(4)45.64%
Min EPS beat(4)6.78%
Max EPS beat(4)95.2%
EPS beat(8)4
Avg EPS beat(8)7.01%
EPS beat(12)6
Avg EPS beat(12)3.88%
EPS beat(16)8
Avg EPS beat(16)6.05%
Revenue beat(2)1
Avg Revenue beat(2)2.66%
Min Revenue beat(2)-0.35%
Max Revenue beat(2)5.66%
Revenue beat(4)3
Avg Revenue beat(4)3.57%
Min Revenue beat(4)-0.35%
Max Revenue beat(4)7.61%
Revenue beat(8)6
Avg Revenue beat(8)2.27%
Revenue beat(12)10
Avg Revenue beat(12)1.89%
Revenue beat(16)11
Avg Revenue beat(16)1.79%
PT rev (1m)-5.82%
PT rev (3m)-7.37%
EPS NQ rev (1m)-1.14%
EPS NQ rev (3m)-0.83%
EPS NY rev (1m)6.38%
EPS NY rev (3m)5.57%
Revenue NQ rev (1m)-0.16%
Revenue NQ rev (3m)-0.68%
Revenue NY rev (1m)0.57%
Revenue NY rev (3m)-0.16%
Valuation
Industry RankSector Rank
PE 10.47
Fwd PE 12.44
P/S 2.27
P/FCF 5.95
P/OCF 5.78
P/B 2.65
P/tB 2.69
EV/EBITDA N/A
EPS(TTM)19.11
EY9.55%
EPS(NY)16.09
Fwd EY8.04%
FCF(TTM)33.6
FCFY16.79%
OCF(TTM)34.63
OCFY17.31%
SpS88.08
BVpS75.37
TBVpS74.35
PEG (NY)N/A
PEG (5Y)0.88
Profitability
Industry RankSector Rank
ROA 3.73%
ROE 29.08%
ROCE N/A
ROIC N/A
ROICexc N/A
ROICexgc N/A
OM N/A
PM (TTM) 24.89%
GM N/A
FCFM 38.14%
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 RankSector Rank
Debt/Equity 0.53
Debt/FCF 1.66
Debt/EBITDA N/A
Cap/Depr 121.4%
Cap/Sales 1.18%
Interest Coverage N/A
Cash Conversion N/A
Profit Quality 153.27%
Current Ratio N/A
Quick Ratio N/A
Altman-Z N/A
F-Score9
WACC13.22%
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-8.36%
EPS Next 2Y0.39%
EPS Next 3Y4.38%
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-0.89%
Revenue Next 2Y1.36%
Revenue Next 3Y2.03%
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 1Y21.87%
FCF growth 3Y11.88%
FCF growth 5Y6.65%
OCF growth 1Y21.08%
OCF growth 3Y11.86%
OCF growth 5Y6.34%