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.

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Discover Financial Services stock research in summary

discover.com


ANALYSIS: With an Obermatt Combined Rank of 24 (worse than 76% compared with investment alternatives), Discover Financial Services (Consumer Finance, USA) shares have lower financial characteristics compared with similar stocks. Shares of Discover Financial Services are a good value (attractively priced) with a consolidated Value Rank of 50 (better than 50% of alternatives), are safely financed (Safety Rank of 53, which means low debt burdens), but show below-average growth (Growth Rank of 17). ...read more


RECOMMENDATION: A Combined Rank of 24, is a sell recommendation based on Discover Financial Services's financial characteristics. As the company Discover Financial Services's key financial metrics exhibit good value (Obermatt Value Rank of 50) but low growth (Obermatt Growth Rank of 17) while being safely financed (Obermatt Safety Rank of 53), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 50% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. 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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Country USA
Industry Consumer Finance
Index Diversity USA, S&P 500
Size class XX-Large

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




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Research History: Discover Financial Services

RESEARCH HISTORY 2021 2022 2023 2024
VALUE
VALUE
GROWTH
GROWTH
SAFETY
SAFETY
SENTIMENT
SENTIMENT
360° VIEW
360° VIEW

Most recent update of the stock research: 14-Mar-2024. Financial reporting date used for calculating ranks: 30-Sep-2023. 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

ANALYSIS: With an Obermatt Combined Rank of 24 (worse than 76% compared with investment alternatives), Discover Financial Services (Consumer Finance, USA) shares have lower financial characteristics compared with similar stocks. Shares of Discover Financial Services are a good value (attractively priced) with a consolidated Value Rank of 50 (better than 50% of alternatives), are safely financed (Safety Rank of 53, which means low debt burdens), but show below-average growth (Growth Rank of 17). ...read more

RECOMMENDATION: A Combined Rank of 24, is a sell recommendation based on Discover Financial Services's financial characteristics. As the company Discover Financial Services's key financial metrics exhibit good value (Obermatt Value Rank of 50) but low growth (Obermatt Growth Rank of 17) while being safely financed (Obermatt Safety Rank of 53), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 50% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. 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
GROWTH
GROWTH
SAFETY
SAFETY
COMBINED
COMBINED

Last update of combined financial performance: 14-Mar-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 50 (better than 50% compared with alternatives), Discover Financial Services shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for Discover Financial Services. Price-to-Sales (P/S) is 63, which means that the stock price compared with what market professionals expect for future sales is lower than for 63% of comparable companies, indicating a good value concerning Discover Financial Services's revenue size. The same is valid for dividend yields with a Dividend Yield rank of 60, which means that dividends are expected to be higher than for 60% of comparable investments. On the other hand, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is less favorable than for 61% of alternatives (only 39% of peers have an even higher ratio). The same is valid for the Price-to-Profit (or Price / Earnings, P/E) ratio, which is higher than for 53% of comparable companies, making the stock more expensive compared with the company's expected profit levels. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 50, is a buy recommendation based on Discover Financial Services's stock price compared with the company's operational size and dividend yields. This is a somewhat surprising picture, because it means that profits are low while dividends are high. One interpretation could be that profits are expected to increase, justifying the high dividend payments. But it could also mean that the company desperately keeps the high dividends to avoid a collapsing share price. This would be a rather dangerous constellation. 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 especially important 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)
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)
DIVIDEND YIELD
DIVIDEND YIELD
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE

Last update of Value Rank: 14-Mar-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 17 (better than 17% compared with alternatives), Discover Financial Services shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Discover Financial Services. Only Capital Growth has a good rank of 57, which means that currently professionals expect the company to grow its invested capital more than 25% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 14 which means that currently professionals expect the company to grow less than 86% of its competitors. Profit Growth with a rank of 25 and Stock Returns with a rank of 47 are also low (below 53% of alternative investments). ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 17, is a sell recommendation for growth and momentum investors. The good news from the invested capital side is surprising. A company with disappointing revenues, profits, and disappointed shareholders typically doesn't invest above average. Overall, the growth momentum for Discover Financial Services is thus negative. As it is intriguing to see that company executives are optimistic about their investment policy, it is worthwhile looking into the details of the capital investment projects. They may indicate future growth and profits and thus if accompanied by a good value, a sign of good timing to invest in the stock. 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, especially since the growth performance is limited here. ...read more

GROWTH METRICS 2021 2022 2023 2024
REVENUE GROWTH
REVENUE GROWTH
PROFIT GROWTH
PROFIT GROWTH
CAPITAL GROWTH
CAPITAL GROWTH
STOCK RETURNS
STOCK RETURNS
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH

Last update of Growth Rank: 14-Mar-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 53 (better than 53% compared with alternatives), the company Discover Financial Services has financing practices on the safer side, which mean that their overall debt burden is lower than average. 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 two out of three are above average for Discover Financial Services.Leverage is at 65, meaning the company has a below-average debt-to-equity ratio. It has less debt than 65% of its competitors.Refinancing is at a rank of 55, meaning that the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 55% of its competitors. Liquidity is at 29, meaning that the company generates less profit to service its debt than 71% of its competitors. This indicates that the company is on the riskier side regarding debt service. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 53 (better than 53% compared with alternatives), Discover Financial Services has a financing structure that is safer than that of its competitors. Low leverage and low refinancing risk mean a safer financing situation. However, low liquidity means that current company cash flows are low in relation to the level of debt. This is a sign of caution in case it is expected for profits to remain low. Investors should compare Obermatt’s Value, Growth, and Sentiment Ranks before deciding. They may also want to investigate why cash flows are expected to be low, making debt service for Discover Financial Services more challenging. ...read more

SAFETY METRICS 2021 2022 2023 2024
LEVERAGE
LEVERAGE
REFINANCING
REFINANCING
LIQUIDITY
LIQUIDITY
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY

Last update of Safety Rank: 14-Mar-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
OPINIONS CHANGE
OPINIONS CHANGE
PRO HOLDINGS
PRO HOLDINGS
MARKET PULSE
MARKET PULSE
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT

Last update of Sentiment Rank: 14-Mar-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Discover Financial Services.
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Stock analysis by the purely fact based Obermatt Method for Discover Financial Services from March 14, 2024.

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