Post-Market Laggard: Discover Financial Services (DFS)

Trade-Ideas LLC identified Discover Financial Services (DFS) as a post-market laggard candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Discover Financial Services

(

DFS

) as a post-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Discover Financial Services as such a stock due to the following factors:

  • DFS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $152.2 million.
  • DFS is down 2.4% today from today's close.

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More details on DFS:

Discover Financial Services operates as a direct banking and payment services company in the United States. It operates in two segments, Direct Banking and Payment Services. The stock currently has a dividend yield of 2.1%. DFS has a PE ratio of 11. Currently there are 15 analysts that rate Discover Financial Services a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Discover Financial Services has been 3.2 million shares per day over the past 30 days. Discover Financial Services has a market cap of $23.7 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.44 and a short float of 1.4% with 2.21 days to cover. Shares are up 6.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Discover Financial Services as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, good cash flow from operations, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • DFS's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • DISCOVER FINANCIAL SVCS INC has improved earnings per share by 5.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DISCOVER FINANCIAL SVCS INC increased its bottom line by earning $5.13 versus $4.90 in the prior year. This year, the market expects an improvement in earnings ($5.68 versus $5.13).
  • Net operating cash flow has slightly increased to $1,158.00 million or 8.93% when compared to the same quarter last year. Despite an increase in cash flow, DISCOVER FINANCIAL SVCS INC's cash flow growth rate is still lower than the industry average growth rate of 42.99%.
  • 45.74% is the gross profit margin for DISCOVER FINANCIAL SVCS INC which we consider to be strong. Regardless of DFS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DFS's net profit margin of 22.47% compares favorably to the industry average.
  • After a year of stock price fluctuations, the net result is that DFS's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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