NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, notable return on equity, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.
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Highlights from the ratings report include:
- Powered by its strong earnings growth of 40.47% and other important driving factors, this stock has surged by 39.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DFS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Consumer Finance industry average. The net income increased by 35.7% when compared to the same quarter one year prior, rising from $464.89 million to $631.01 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.7%. Since the same quarter one year prior, revenues slightly increased by 4.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Consumer Finance industry and the overall market, DISCOVER FINANCIAL SVCS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- The gross profit margin for DISCOVER FINANCIAL SVCS INC is rather high; currently it is at 52.90%. It has increased significantly from the same period last year. Along with this, the net profit margin of 28.70% significantly outperformed against the industry average.
Discover Financial Services, a bank holding company, offers direct banking and payment services in the United States. It operates in two segments, Direct Banking and Payment Services. The company has a P/E ratio of 7.6, equal to the average financial services industry P/E ratioand below the S&P 500 P/E ratio of 17.7. Discover Financial Services has a market cap of $17.8 billion and is part of the
industry. Shares are up 39.9% year to date as of the close of trading on Wednesday.
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--Written by a member of TheStreet Ratings Staff.
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.