Discover Financial Services (DFS): Today's Featured Financial Laggard

Editor's Note: 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.

Discover Financial Services ( DFS) pushed the Financial sector lower today making it today's featured Financial laggard. The sector as a whole was unchanged today. By the end of trading, Discover Financial Services fell $1.64 (-4.1%) to $38.34 on heavy volume. Throughout the day, 12.8 million shares of Discover Financial Services exchanged hands as compared to its average daily volume of four million shares. The stock ranged in price between $37.90-$40.07 after having opened the day at $39.98 as compared to the previous trading day's close of $39.98. Other companies within the Financial sector that declined today were: Royal Bancshares of Pennsylvania ( RBPAA), down 22.6%, Paulson Capital ( PLCC), down 11.8%, Carver Bancorp ( CARV), down 9.7%, and Impac Mortgage Holdings ( IMH), down 9%.
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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. Discover Financial Services has a market cap of $20.79 billion and is part of the financial services industry. The company has a P/E ratio of 9.5, below the S&P 500 P/E ratio of 17.7. Shares are up 71.6% year to date as of the close of trading on Wednesday. Currently there are 13 analysts that rate Discover Financial Services a buy, no analysts rate it a sell, and five rate it a hold.

TheStreet Ratings rates Discover Financial Services as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, good cash flow from operations, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

On the positive front, SGOCO Group ( SGOC), up 79.7%, Bluegreen Corporation ( BXG), up 55.6%, Donegal Group ( DGICB), up 17.2%, and Community Financial ( CFFC), up 14.5%, were all gainers within the financial sector with BB&T ( BBT) being today's featured financial sector leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the financial sector could consider Financial Select Sector SPDR ( XLF) while those bearish on the financial sector could consider Proshares Short Financials ( SEF).

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