Discover Financial Services (NYSE:DFS) Shares Gap Down Following Weak Earnings

Posted by Defense World Staff on Jul 21st, 2023

Discover Financial Services (NYSE:DFS)’s stock price gapped down prior to trading on Thursday following a weaker than expected earnings announcement. The stock had previously closed at $121.85, but opened at $103.37. Discover Financial Services shares last traded at $105.42, with a volume of 1,732,597 shares trading hands.

The financial services provider reported $3.54 EPS for the quarter, missing the consensus estimate of $3.70 by ($0.16). The company had revenue of $3.88 billion for the quarter, compared to analyst estimates of $3.88 billion. Discover Financial Services had a net margin of 24.65% and a return on equity of 31.30%. Discover Financial Services’s revenue for the quarter was up 20.7% compared to the same quarter last year. During the same quarter in the previous year, the company earned $3.96 earnings per share.

Discover Financial Services Dividend Announcement

The firm also recently declared a quarterly dividend, which will be paid on Thursday, September 7th. Shareholders of record on Thursday, August 24th will be issued a $0.70 dividend. This represents a $2.80 annualized dividend and a yield of 2.73%. The ex-dividend date is Wednesday, August 23rd. Discover Financial Services’s dividend payout ratio (DPR) is presently 18.86%.

Discover Financial Services announced that its board has authorized a stock buyback program on Wednesday, April 19th that permits the company to repurchase $2.70 billion in outstanding shares. This repurchase authorization permits the financial services provider to buy up to 9.8% of its shares through open market purchases. Shares repurchase programs are often an indication that the company’s board believes its shares are undervalued.

Analyst Upgrades and Downgrades

Several research firms have recently weighed in on DFS. JPMorgan Chase & Co. lowered their target price on shares of Discover Financial Services from $111.00 to $102.00 and set a “neutral” rating on the stock in a report on Monday, April 17th. Piper Sandler upped their price target on shares of Discover Financial Services from $129.00 to $130.00 in a research report on Thursday, July 6th. Citigroup upped their price target on shares of Discover Financial Services from $115.00 to $116.00 in a research report on Friday, June 2nd. Morgan Stanley reduced their price target on shares of Discover Financial Services from $115.00 to $112.00 and set an “equal weight” rating on the stock in a research report on Wednesday, April 5th. Finally, Wells Fargo & Company cut their target price on shares of Discover Financial Services from $105.00 to $103.00 and set an “equal weight” rating on the stock in a research report on Friday, March 31st. Ten investment analysts have rated the stock with a hold rating and four have assigned a buy rating to the company. According to data from MarketBeat.com, the stock presently has an average rating of “Hold” and an average target price of $120.60.

Institutional Investors Weigh In On Discover Financial Services

Large investors have recently made changes to their positions in the business. Adirondack Retirement Specialists Inc. bought a new stake in shares of Discover Financial Services during the 1st quarter valued at about $26,000. Sandy Spring Bank raised its holdings in shares of Discover Financial Services by 133.3% during the 4th quarter. Sandy Spring Bank now owns 273 shares of the financial services provider’s stock valued at $27,000 after buying an additional 156 shares in the last quarter. Edmond DE Rothschild Holding S.A. purchased a new position in Discover Financial Services in the 4th quarter worth approximately $29,000. Tsfg LLC increased its stake in Discover Financial Services by 151.2% in the 4th quarter. Tsfg LLC now owns 309 shares of the financial services provider’s stock worth $30,000 after purchasing an additional 186 shares during the period. Finally, Resurgent Financial Advisors LLC purchased a new position in Discover Financial Services in the 4th quarter worth approximately $31,000. 83.81% of the stock is owned by hedge funds and other institutional investors.

Discover Financial Services Stock Down 15.9 %

The company has a current ratio of 1.14, a quick ratio of 1.14 and a debt-to-equity ratio of 1.37. The stock has a 50 day simple moving average of $111.40 and a 200 day simple moving average of $107.02. The firm has a market capitalization of $26.02 billion, a PE ratio of 6.90, a PEG ratio of 1.68 and a beta of 1.44.

Discover Financial Services Company Profile

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Discover Financial Services, through its subsidiaries, provides digital banking products and services, and payment services in the United States. It operates in two segments, Digital Banking and Payment Services. The Digital Banking segment offers Discover-branded credit cards to individuals; private student loans, personal loans, home loans, and other consumer lending; and direct-to-consumer deposit products comprising savings accounts, certificates of deposit, money market accounts, IRA certificates of deposit, IRA savings accounts and checking accounts, and sweep accounts.