Zacks Investment Research Downgrades Discover Financial Services (DFS) to Hold

Zacks Investment Research cut shares of Discover Financial Services (NYSE:DFS) from a buy rating to a hold rating in a research report sent to investors on Wednesday morning, Zacks.com reports.

According to Zacks, “Discover Financial’s shares have outperformed the industry in a year’s time. Moreover, it has witnessed its 2020 earnings estimate move north over the past 30 days. Its strong Direct Banking business has significantly supported its top line. The loan and Payment Services transaction, dollar volume growth and card sales also look promising. The company's effective capital management impresses investors. Revenues of the company have been rising over the past few years, mainly driven by higher net interest incomes and other total income of the company. However, it has been incurring costs to compete with other credit card issuers. Escalating expenses, high provision for losses, increase in debt level are some headwinds. The company expects the expenses for 2019 to be in the band of $4.3-$4.4 billion. Total loans of the company increased 8% in 2018 and the company expects the same to grow by 6-8% in 2019.”

Other analysts also recently issued research reports about the stock. Bank of America set a $80.00 price objective on shares of Discover Financial Services and gave the stock a buy rating in a report on Friday, January 25th. Stephens reissued a hold rating and set a $80.00 price objective on shares of Discover Financial Services in a report on Sunday, January 6th. Compass Point set a $74.00 price objective on shares of Discover Financial Services and gave the stock a hold rating in a report on Friday, January 25th. ValuEngine raised shares of Discover Financial Services from a sell rating to a hold rating in a report on Friday, March 15th. Finally, JMP Securities boosted their price objective on shares of Discover Financial Services from $74.00 to $80.00 and gave the stock a market outperform rating in a report on Thursday, April 4th. Eight research analysts have rated the stock with a hold rating and seven have issued a buy rating to the company. Discover Financial Services has a consensus rating of Hold and a consensus target price of $81.07.

Shares of NYSE:DFS opened at $77.15 on Wednesday. The stock has a market capitalization of $25.34 billion, a PE ratio of 9.88, a PEG ratio of 1.12 and a beta of 1.60. The company has a current ratio of 1.44, a quick ratio of 1.44 and a debt-to-equity ratio of 2.58. Discover Financial Services has a fifty-two week low of $54.36 and a fifty-two week high of $80.36.

Discover Financial Services (NYSE:DFS) last issued its earnings results on Thursday, January 24th. The financial services provider reported $2.03 earnings per share for the quarter, missing the Thomson Reuters’ consensus estimate of $2.09 by ($0.06). The firm had revenue of $2.81 billion during the quarter, compared to analysts’ expectations of $2.81 billion. Discover Financial Services had a net margin of 21.25% and a return on equity of 26.22%. The firm’s revenue was up 7.4% on a year-over-year basis. During the same period in the previous year, the firm earned $1.51 EPS. On average, equities analysts predict that Discover Financial Services will post 8.62 earnings per share for the current fiscal year.

The firm also recently declared a quarterly dividend, which will be paid on Thursday, June 6th. Shareholders of record on Friday, May 24th will be issued a $0.40 dividend. This represents a $1.60 annualized dividend and a dividend yield of 2.07%. The ex-dividend date is Thursday, May 23rd. Discover Financial Services’s dividend payout ratio (DPR) is presently 20.54%.

In other Discover Financial Services news, EVP Carlos Minetti sold 7,500 shares of the company’s stock in a transaction dated Friday, February 1st. The shares were sold at an average price of $67.59, for a total value of $506,925.00. Following the sale, the executive vice president now owns 131,598 shares of the company’s stock, valued at $8,894,708.82. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through the SEC website. Also, insider David W. Nelms sold 60,000 shares of the company’s stock in a transaction dated Friday, February 1st. The shares were sold at an average price of $67.94, for a total transaction of $4,076,400.00. Following the completion of the sale, the insider now directly owns 1,060,191 shares in the company, valued at approximately $72,029,376.54. The disclosure for this sale can be found here. Insiders sold 117,062 shares of company stock worth $8,124,691 in the last ninety days. Insiders own 0.81% of the company’s stock.

Several hedge funds and other institutional investors have recently made changes to their positions in DFS. JPMorgan Chase & Co. lifted its holdings in shares of Discover Financial Services by 1.1% in the third quarter. JPMorgan Chase & Co. now owns 3,717,616 shares of the financial services provider’s stock valued at $284,212,000 after purchasing an additional 39,555 shares in the last quarter. Bank of New York Mellon Corp lifted its holdings in shares of Discover Financial Services by 7.4% in the third quarter. Bank of New York Mellon Corp now owns 3,961,303 shares of the financial services provider’s stock valued at $302,841,000 after purchasing an additional 272,970 shares in the last quarter. Martingale Asset Management L P lifted its holdings in shares of Discover Financial Services by 11.9% in the third quarter. Martingale Asset Management L P now owns 101,297 shares of the financial services provider’s stock valued at $7,745,000 after purchasing an additional 10,745 shares in the last quarter. Standard Life Aberdeen plc lifted its holdings in shares of Discover Financial Services by 19.3% in the third quarter. Standard Life Aberdeen plc now owns 451,891 shares of the financial services provider’s stock valued at $34,549,000 after purchasing an additional 73,074 shares in the last quarter. Finally, LPL Financial LLC lifted its holdings in shares of Discover Financial Services by 7.9% in the third quarter. LPL Financial LLC now owns 63,469 shares of the financial services provider’s stock valued at $4,852,000 after purchasing an additional 4,661 shares in the last quarter. 87.29% of the stock is currently owned by institutional investors.

Discover Financial Services Company Profile

Discover Financial Services, through its subsidiaries, operates as a direct banking and payment services company in the United States. The Direct Banking segment offers Discover-branded credit cards to individuals; and other consumer products and services, including private student loans, personal loans, home equity loans, and other consumer lending, as well as deposit products, such as certificates of deposit, money market accounts, savings accounts, checking accounts, and individual retirement arrangement certificates of deposit.

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