Fact based stock research
Discover Financial Services (NYSE:DFS)
US2547091080
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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Discover Financial Services stock research in summary
ANALYSIS: With an Obermatt Combined Rank of 74 (better than 74% compared with investment alternatives), Discover Financial Services (Consumer Finance, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Discover Financial Services are low in value (priced high) with a consolidated Value Rank of 37 (worse than 63% of alternatives). But they show above-average growth (Growth Rank of 53) and are safely financed (Safety Rank of 91, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 74, is a buy recommendation based on Discover Financial Services's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Discover Financial Services exhibits low value (Obermatt Value Rank of 37), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 53). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 91) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more
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360° Viewnew| Country | USA |
| Industry | Consumer Finance |
| Index | Diversity USA, S&P 500 |
| Size class | XX-Large |
14-Nov-2024. Stock data may be delayed. Log in or sign up to get the most recent research.
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Review the performance ranks of the individual metrics that form each investment strategy.
Research History: Discover Financial Services
| RESEARCH HISTORY | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 72 |
|
39 |
|
52 |
|
37 |
|
| GROWTH | ||||||||
| GROWTH | 97 |
|
61 |
|
51 |
|
53 |
|
| SAFETY | ||||||||
| SAFETY | 81 |
|
80 |
|
61 |
|
91 |
|
| SENTIMENT | ||||||||
| SENTIMENT | n/a |
|
91 |
|
86 |
|
new |
|
| 360° VIEW | ||||||||
| 360° VIEW | n/a |
|
95 |
|
89 |
|
new |
|
Combined financial peformance in Detail
ANALYSIS: With an Obermatt Combined Rank of 74 (better than 74% compared with investment alternatives), Discover Financial Services (Consumer Finance, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Discover Financial Services are low in value (priced high) with a consolidated Value Rank of 37 (worse than 63% of alternatives). But they show above-average growth (Growth Rank of 53) and are safely financed (Safety Rank of 91, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 74, is a buy recommendation based on Discover Financial Services's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Discover Financial Services exhibits low value (Obermatt Value Rank of 37), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 53). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 91) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more
| RESEARCH HISTORY | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 72 |
|
39 |
|
52 |
|
37 |
|
| GROWTH | ||||||||
| GROWTH | 97 |
|
61 |
|
51 |
|
53 |
|
| SAFETY | ||||||||
| SAFETY | 81 |
|
80 |
|
61 |
|
91 |
|
| COMBINED | ||||||||
| COMBINED | 100 |
|
82 |
|
65 |
|
74 |
|
Value Metrics in Detail
ANALYSIS: With an Obermatt Value Rank of 37 (worse than 63% compared with alternatives), Discover Financial Services shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Discover Financial Services. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 57% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 48 which means that the stock price compared with what market professionals expect for future profits is higher than 52% of comparable companies, indicating a low value concerning Discover Financial Services's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 42 which means that the stock price compared with what market professionals expect for future profit levels is higher than 58% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 38 is also low. Compared with invested capital, the stock price is higher than for 62% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 37, is a hold recommendation based on Discover Financial Services's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Discover Financial Services? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Discover Financial Services only if they reasonably expect the low current profit levels to be transitory. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more
| VALUE METRICS | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| PRICE VS. REVENUES (P/S) | ||||||||
| PRICE VS. REVENUES (P/S) | 81 |
|
44 |
|
67 |
|
48 |
|
| PRICE VS. PROFITS (P/E) | ||||||||
| PRICE VS. PROFITS (P/E) | 91 |
|
63 |
|
69 |
|
42 |
|
| PRICE VS. CAPITAL (Market-to-Book) | ||||||||
| PRICE VS. CAPITAL (Market-to-Book) | 34 |
|
28 |
|
34 |
|
38 |
|
| DIVIDEND YIELD | ||||||||
| DIVIDEND YIELD | 50 |
|
55 |
|
62 |
|
57 |
|
| CONSOLIDATED RANK: VALUE | ||||||||
| CONSOLIDATED RANK: VALUE | 72 |
|
39 |
|
52 |
|
37 |
|
Growth Metrics in Detail
ANALYSIS: With an Obermatt Growth Rank of 53 (better than 53% compared with alternatives), Discover Financial Services shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Discover Financial Services. Profit Growth has a rank of 63 which means that currently professionals expect the company to grow its profits more than 63% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 55, and Stock Returns has a rank of 87 which means that the stock returns have recently been above 87% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 3 (97% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 53, is a buy recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case. ...read more
| GROWTH METRICS | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 87 |
|
33 |
|
42 |
|
3 |
|
| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 41 |
|
92 |
|
37 |
|
63 |
|
| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | n/a |
|
23 |
|
77 |
|
55 |
|
| STOCK RETURNS | ||||||||
| STOCK RETURNS | 94 |
|
57 |
|
39 |
|
87 |
|
| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 97 |
|
61 |
|
51 |
|
53 |
|
Safety Metrics in Detail
ANALYSIS: With an Obermatt Safety Rank of 91 (better than 91% compared with alternatives) for 2024, the company Discover Financial Services has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Discover Financial Services is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Discover Financial Services. Leverage is at 97, meaning the company has a below-average debt-to-equity ratio. It has less debt than 97% of its competitors. Refinancing is at a rank of 51, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 51% of its competitors. Finally, Liquidity is also good at a rank of 55, which means that the company generates more profit to service its debt than 55% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 91 (better than 91% compared with alternatives), Discover Financial Services has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. Investors may not have a debt issue with Discover Financial Services but they should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more
| SAFETY METRICS | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 42 |
|
66 |
|
64 |
|
97 |
|
| REFINANCING | ||||||||
| REFINANCING | 88 |
|
67 |
|
27 |
|
51 |
|
| LIQUIDITY | ||||||||
| LIQUIDITY | 58 |
|
44 |
|
53 |
|
55 |
|
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 81 |
|
80 |
|
61 |
|
91 |
|
Sentiment Metrics in Detail
| SENTIMENT | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| ANALYST OPINIONS | ||||||||
| ANALYST OPINIONS | n/a |
|
62 |
|
69 |
|
new |
|
| OPINIONS CHANGE | ||||||||
| OPINIONS CHANGE | n/a |
|
53 |
|
62 |
|
new |
|
| PRO HOLDINGS | ||||||||
| PRO HOLDINGS | n/a |
|
91 |
|
70 |
|
new |
|
| MARKET PULSE | ||||||||
| MARKET PULSE | n/a |
|
64 |
|
47 |
|
new |
|
| CONSOLIDATED RANK: SENTIMENT | ||||||||
| CONSOLIDATED RANK: SENTIMENT | n/a |
|
91 |
|
86 |
|
new |
|
Free stock analysis by the purely fact based Obermatt Method for Discover Financial Services from November 14, 2024.
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