Critical Comparison: Discover Financial Services (DFS) & Its Rivals
Discover Financial Services (NYSE: DFS) is one of 27 public companies in the “Consumer Lending” industry, but how does it compare to its peers? We will compare Discover Financial Services to related businesses based on the strength of its valuation, analyst recommendations, risk, institutional ownership, dividends, profitability and earnings.
Earnings & Valuation
This table compares Discover Financial Services and its peers revenue, earnings per share and valuation.
|Gross Revenue||EBITDA||Price/Earnings Ratio|
|Discover Financial Services||$7.17 billion||N/A||10.26|
|Discover Financial Services Competitors||$564.84 million||$92.07 million||15.73|
Discover Financial Services has higher revenue, but lower earnings than its peers. Discover Financial Services is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.
Insider & Institutional Ownership
86.2% of Discover Financial Services shares are held by institutional investors. Comparatively, 77.6% of shares of all “Consumer Lending” companies are held by institutional investors. 1.0% of Discover Financial Services shares are held by insiders. Comparatively, 15.2% of shares of all “Consumer Lending” companies are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Volatility & Risk
Discover Financial Services has a beta of 1.45, meaning that its stock price is 45% more volatile than the S&P 500. Comparatively, Discover Financial Services’ peers have a beta of 1.48, meaning that their average stock price is 48% more volatile than the S&P 500.
This table compares Discover Financial Services and its peers’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Discover Financial Services||20.91%||21.28%||2.46%|
|Discover Financial Services Competitors||-28.26%||-17.28%||0.63%|
This is a breakdown of current ratings for Discover Financial Services and its peers, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Discover Financial Services||1||7||15||0||2.61|
|Discover Financial Services Competitors||192||744||1066||58||2.48|
Discover Financial Services currently has a consensus price target of $73.61, indicating a potential upside of 23.86%. As a group, “Consumer Lending” companies have a potential upside of 59.50%. Given Discover Financial Services’ peers higher possible upside, analysts plainly believe Discover Financial Services has less favorable growth aspects than its peers.
Discover Financial Services pays an annual dividend of $1.40 per share and has a dividend yield of 2.4%. Discover Financial Services pays out 24.2% of its earnings in the form of a dividend. As a group, “Consumer Lending” companies pay a dividend yield of 1.7% and pay out 25.6% of their earnings in the form of a dividend. Discover Financial Services has raised its dividend for 6 consecutive years. Discover Financial Services is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.
Discover Financial Services beats its peers on 9 of the 14 factors compared.
About Discover Financial Services
Discover Financial Services (DFS) is a direct banking and payment services company. The Company is a bank holding company, as well as a financial holding company. The Company operates through two segments: Direct Banking and Payment Services. It provides direct banking products and services, and payment services through its subsidiaries. It offers its customers credit card loans, private student loans, personal loans, home equity loans and deposit products. The Company’s Direct Banking segment includes consumer banking and lending products, specifically Discover-branded credit cards issued to individuals and small businesses on the Discover Network and other consumer banking products and services. The Company’s direct banking offers credit cards, student loans, personal loans, home equity loans, and other consumer lending and deposit products. The Payment Services segment includes PULSE, Diners Club and the Company’s Network Partners business.
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