Discover Financial Services (DFS): Today's Featured Financial Services 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 Services industry lower today making it today's featured Financial Services laggard. The industry as a whole closed the day down 1.1%. By the end of trading, Discover Financial Services fell 60 cents (-1.5%) to $38.33 on average volume. Throughout the day, 6.5 million shares of Discover Financial Services exchanged hands as compared to its average daily volume of 5.1 million shares. The stock ranged in price between $38.04-$38.79 after having opened the day at $38.76 as compared to the previous trading day's close of $38.93. Other companies within the Financial Services industry that declined today were: China Ceramics ( CCCL), down 8.5%, Carlyle Group ( CG), down 7.8%, Credit Acceptance Corporation ( CACC), down 7.8%, and RBS Oil Trendpilot Exchange Traded Notes ( TWTI), down 7.1%.
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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 $19.67 billion and is part of the financial sector. The company has a P/E ratio of 8.9, below the S&P 500 P/E ratio of 17.7. Shares are up 2.5% year to date as of the close of trading on Wednesday. Currently there are 14 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, increase in net income, revenue growth, good cash flow from operations 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.

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

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