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

discover.com

ANALYSIS: With an Obermatt Combined Rank of 75 (better than 75% compared with investment alternatives), Discover Financial Services (Consumer Finance, USA) shares have much better financial characteristics than comparable stocks. Shares of Discover Financial Services are low in value (priced high) with a consolidated Value Rank of 41 (worse than 59% of alternatives) and show below-average growth (Growth Rank of 47) but are safely financed (Safety Rank of 86), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 75, is a strong buy recommendation based on Discover Financial Services's financial characteristics. As the company Discover Financial Services's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 41) and low growth (Obermatt Growth Rank of 47), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 86) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	41
Growth Rank	47
Safety Rank	86
Combined Rank	75

Country	USA
Industry	Consumer Finance
Index	Diversity USA, S&P 500
Size class	X-Large

19-Dec-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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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	41
GROWTH
GROWTH	97	61	51	47
SAFETY
SAFETY	81	80	61	86
SENTIMENT
SENTIMENT	n/a	91	86	^new
360° VIEW
360° VIEW	n/a	95	89	^new

Most recent update of the stock research: 19-Dec-2024. Financial reporting date used for calculating ranks: 30-Sep-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Discover Financial Services is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	72	39	52	41
GROWTH
GROWTH	97	61	51	47
SAFETY
SAFETY	81	80	61	86
COMBINED
COMBINED	100	82	65	75

Last update of combined financial performance: 19-Dec-2024. Stock analysis on combined financial performance: The higher the rank of Discover Financial Services the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 41 (worse than 59% 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 59% 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 41 is also low. Compared with invested capital, the stock price is higher than for 59% of comparable investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 41, 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	41
DIVIDEND YIELD
DIVIDEND YIELD	50	55	62	59
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	72	39	52	41

Last update of Value Rank: 19-Dec-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Discover Financial Services; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 47 (better than 47% compared with alternatives), Discover Financial Services shows a below-average growth dynamic in its industry. There is limited momentum in this company. 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 65 which means that currently professionals expect the company to grow its profits more than 65% 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 83 which means that the stock returns have recently been above 83% 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 47, is a hold 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	65
CAPITAL GROWTH
CAPITAL GROWTH	n/a	23	77	55
STOCK RETURNS
STOCK RETURNS	94	57	39	83
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	97	61	51	47

Last update of Growth Rank: 19-Dec-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Discover Financial Services.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 86 (better than 86% 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 98, meaning the company has a below-average debt-to-equity ratio. It has less debt than 98% 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 86 (better than 86% 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	98
REFINANCING
REFINANCING	88	67	27	51
LIQUIDITY
LIQUIDITY	58	44	53	55
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	81	80	61	86

Last update of Safety Rank: 19-Dec-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Discover Financial Services and the more cash is available to service its debt.

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

Last update of Sentiment Rank: 19-Dec-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Discover Financial Services.
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