- Discover Financial: The shares closed at $52.39 Friday and traded for 10.3 times the consensus 2014 earnings estimate of $5.08 a share, among analysts polled by Thomson Reuters. The company's reported return on equity (ROE) for the first three quarters of 2013 was 24%.
- Capital One Financial: The shares closed at $70.37 Friday and traded for 10.1 times the consensus 2014 EPS estimate of $6.96. The company reported returns on average tangible common equity (ROTCE) of 18.85% for the first three quarters of 2013.
- American Express: The shares closed at $82.80 Friday and traded for 15.3 times the consensus 2014 EPS estimate of $5.41. The company reported an ROE of 24.3% for the first three quarters of 2013.
- Alliance Data Systems: The shares closed at $249.11 Friday and traded for 20.6 times the consensus 2014 EPS estimate of $12.10.
- Bank of America: The shares closed at $14.92 Friday and traded for 11.1 times the consensus 2014 EPS estimate of $1.34. The company reported a return on average tangible shareholders' equity of 6.67% for the first three quarters of 2013.
- JPMorgan Chase: The shares closed at $54.87 Friday and traded for 9.1 times the consensus 2014 EPS estimate of $6.02. JPM reported a return on common equity of 11% for the first three quarters of 2013, even though third-quarter earnings were wiped out by $9.15 billion in provisions for litigation expenses.
- Wells Fargo: The shares closed at $43.54 Friday and traded for 10.9 times the consensus 2014 EPS estimate of $4.01. The company reported a return on average common equity of 13.92% for the first three quarters of 2013.
- Citigroup: The shares closed at $50.40 Friday and traded for 9.3 times the consensus 2014 EPS estimate of $5.43. The company reported a return on average common equity of 7.83% for the first three quarters of 2013.
NEW YORK ( TheStreet) -- "We believe resumption of receivables growth, while maintaining strong credit performance could benefit all issuers, particularly those with low valuations which may enable multiple expansion." Those words from FBR analyst Scott Valentin are music to the ears of investors holding shares of Discover Financial Services ( DFS) and Capital One Financial ( COF), which trade at significant discounts to other "purer play" credit card lenders. Credit card lenders report numbers for their portfolio and securitized card loans each month. The "master trust" data for the securitized loans shows a continued significant decline in overall loan balances, as U.S. consumers continue to pay down card balances at a historically elevated rate. But nearly all of the big card lenders showed year-over-year growth of over 1% for their on-balance-sheet credit card portfolios during October, which Valentin highlighted in a note to clients on Monday. This is a great thing for investors considering how profitable credit card lending can be, especially during a time of stellar loan quality. In addition to Discover and Capital One, this group includes American Express ( AXP), Bank of America ( BAC) , Citigroup ( C) and JPMorgan Chase ( JPM). General Electric ( GE) is the largest private label credit card lender, with a portfolio of roughly $36 billion as of Sept. 30. But the company on Friday announced plans to spin off its consumer credit business, in a transaction that will be tax free to current GE shareholders and include an IPO of up to 20% of the equity in the new company. This appears to be a fantastic deal for shareholders, as well as for General Electric, which continues to trim away GE Capital, in order to focus more on its main industrial business. According to KBW analyst Sanjay Sakhrani, The business being spun off had a very strong 4% return on assets during 2012, with a profit of $2.2 billion on about $53 billion in total assets. "Given the size and private label focus of GE's current operations, we feel that the implications are fairly limited to certain names in our coverage universe, namely Capital One and on a smaller scale Alliance Data ( ADS)," Sakhrani wrote in client note on Friday. "Freeing up" the consumer finance unit could unlock significant value for investors. Then again, the GE consumer finance unit's "bank funding advantage could be moderated as the business would not likely have the same access to funding as it currently has," Sakhrani wrote. So the new company may be operating on a more even playing field than it currently enjoys. It will be fascinating to see how aggressive the new company's management will be after GE completes the spinoff during 2014.
Alliance Data Systems is a relatively small pure play private label credit card lender, with average receivables of $7.425 billion during October. But that was up 14% from a year earlier. Here are the current stock valuations to consensus forward earnings estimates, along with return on equity numbers (if available), depending on how they were reported by each company, for all the lenders listed above, except for General Electric: