Discover Financial’s Financial Preview: What to Expect

With a market capitalization of $33.5 billion, Discover Financial Services (DFS), headquartered in Riverwoods, Illinois, is a digital banking and payment services company that offers a variety of financial products through its networks. The company is scheduled to report fiscal second-quarter earnings after the market closes on Wednesday, July 17.

Ahead of the event, analysts are expecting Discover Financial to report earnings of $2.97 per share, down 16.1% from $3.54 per share in the year-ago quarter. The company has consistently missed Wall Street estimates for net income in its last four quarterly reports. Despite reporting better-than-expected revenue, DFS missed consensus EPS estimates by 63.1% in the latest quarter due to higher loan-loss provisions.

For fiscal 2024, analysts forecast DFS will post earnings per share of $11.47, up 1.9% from $11.26 in fiscal 2023.

Discover Financial has outperformed the broader market in 2024, with shares up 18.8% year-over-year, while the S&P 500 Index ($SPX) has added 15.5% and the S&P 500 Financials Sector SPDR Index (XLF) has returned 10.9% over the same period.

On February 20, Discover Financial shares rose 12.6% on the back of an announcement of an acquisition by Capital One Financial (COF) that valued the company at $35.3 billion. Furthermore, despite a significant drop in profit, the shares rose 3.7% following Q1 results on April 17, as investors were encouraged by a significant increase in net interest income (NII).

Analysts are unanimously of the opinion that Discover Financial stock is bullish, with a “Moderate Buy” rating. Of the 19 analysts covering the stock, seven recommend a “Strong Buy,” one has a “Moderate Buy” rating, and 11 give a “Hold” rating. This setup is more bullish than it was three months ago, with six analysts suggesting a “Strong Buy.” DFS is trading slightly below analysts’ average price target of $133.88.

On the date of publication, Sohini Mondal did not hold (directly or indirectly) a position in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For further information, please refer to Barchart’s Disclosure Policy here.