Discover Financial Services (DFS) Q4 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Discover Financial Services (NYSE:DFS) is scheduled to report Q4 earnings results on January 23, 2020, after markets close for trading.

The company is expected to report earnings of $2.25/share on revenue of $2.943 billion. The consensus earnings per share (EPS) of $2.25/share is based on a poll of 19 analysts and represents a growth of 10.8% over the same quarter last year when the company reported earnings of $2.03/share.

The revenue forecast of $2.943 billion based on a poll of 11 analysts implies a year-over-year (YoY) growth of 4.8%. Last year the company reported $2.807 billion in revenue for the quarter.

Expected to report EPS growth of $0.22/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $2,943.00 $2,807.00 4.8%
EPS $2.25 $2.03 10.8%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, missed 1 quarter, and met expectations 1 quarter.

What are your expectations from Discover Financial Services for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $2.28 $2.36 3.4% Beat
Q2, 2019 $2.10 $2.32 10.5% Beat
Q1, 2019 $2.03 $2.15 5.9% Beat
Q4, 2018 $2.06 $2.03 -1.5% Missed
Q3, 2018 $2.05 $2.05 0.0% Meet
Q2, 2018 $1.88 $1.91 1.6% Beat
Q1, 2018 $1.79 $1.82 1.7% Beat
Q4, 2017 $1.54 $1.55 0.6% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report.

After the last earnings report for the period ending September 30, 2019, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-22 $80.44 $80.52 0.1% Increase
2019-07-23 $82.33 $92 11.7% Increase
2019-04-25 $77.02 $81.19 5.4% Increase
2019-01-24 $66.16 $66.73 0.9% Increase

Fundamentals And Technical Analysis

Discover Financial Services is currently trading at $83.68/share, down -0.9% for the day. The company is trading at approximately 90.0% of its 52-week high of $92.98/share. The company’s stock price is up 3.9% since the last earnings report and up 0.8% over the previous week.

NYSE:DFS Stock Price Chart Source: Finbox

The company’s 14 Day Relative Price Index (RSI) of 54.01 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 9.0x and a forward P/E multiple of 9.1x. Discover’s current share price also implies a price-to-book (P/B) multiple of 2.4x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date September 30, 2019
Stock Price (Current) $83.68
P/E Ratio 9.0x
P/E Ratio (Fwd) 9.1x
PEG Ratio -8.7
Total Debt to Capital (%) 47.5%
Levered Free Cash Flow $5.204 billion
Market Capitalization $26.469

Source: Finbox

Company Profile: Discover Financial Services

Discover Financial Services is a large-cap stock with a market capitalization of $26.469 billion. The company operates in the Financial sector and the Consumer Finance industry.

Discover 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.

The Payment Services segment operates the PULSE network, an automated teller machine, debit, and electronic funds transfer network; Diners Club International, a payments network that issues Diners Club branded charge cards and provides card acceptance services; and Discover Network that processes transactions for Discover-branded credit and debit cards, as well as provides payment transaction processing and settlement services.

The company was incorporated in 1986 and is based in Riverwoods, Illinois.

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