Discover Financial Services

American Express (AXP) expects its full-year 2016 EPS to be between $5.40–$5.70. It looks to return to positive EPS growth in 2016 and is targeting a minimum of $5.60 EPS for 2017.

Potential new developments from the Fed include a suggestion by the subcommittee on communications that median values of policymakers’ projections be published.

MasterCard’s rebates and incentives rose by 18% to $1.0 billion in 1Q16—higher than expected, mainly due to the timing of some deals and acquisitions.

Capital One Financial Corporation’s (COF) PE (price-to-earnings) ratio is 8.77x on an NTM basis compared to its competitors’ average PE ratio of 20.79x.

Blue Harbour initiated a new position in Alliance Data Systems (ADS) in 4Q14. It bought 1,153,390 shares worth $43 million. ADS accounts for 1.41% of the fund’s portfolio.

Visa (V) has maintained its operating margin above 60% over the past few years. The company’s major expenses include personnel, marketing, network and processing, and professional fees.

286 analysts cover the 15 stocks in the diversified financial services subgroup of the Financial Select Sector SPDR ETF (XLF).

Visa’s total transactions grew by 11% on a YoY (year-over-year) basis in fiscal 4Q15. The company reported total transactions of 27.9 billion in fiscal 4Q15, as compared to 25 billion in fiscal 4Q14.

Visa (V) is expected to post EPS (earnings per share) of $1.11 in the third fiscal quarter (ending in June), boosted by strong business fundamentals.

Payment processors are seeing major changes in 2016, including increased competition on pricing and the adoption of new technologies such as wearables.

Payment processors are rewarding their shareholders with 1%–2% dividend yields, largely dependent on operating performance.

MasterCard (MA) has debt of $3.3 billion with a total balance sheet of $15.9 billion as of March 31, 2016. This compares to $16.2 billion in 4Q15.

Mastercard benefited from the Latin America region. The region witnessed favorable momentum in consumer confidence and lower unemployment.

American Express (AXP) has been using its strong balance sheet position to consistently declare dividends to its shareholders.

In the first quarter, Capital One’s net income totaled $1.3 billion while Discover’s net income reached $666.0 million.

Co-branding relationships are an important part of the American Express business model. The costs of renewing and extending these relationships is increasing.

Five analysts suggested a “hold,” one recommended a “strong sell,” and nine recommended a “strong buy” on DFS stock.

Discover Financial’s (DFS) Payment Services segment saw a rise in its pretax income from $107.0 million in 2016 to $145.0 million in 2017.

PayPal’s mobile volume increased 51.0% in 1Q17 to contribute 32.0% of its total volume during the quarter.

Discover’s 4Q17 operating margin stood at ~49.6% on a TTM (trailing-12-months) basis.

Discover’s enterprise-value-to-revenue ratio is ~4.0.

On April 9, 2018, Mastercard (MA) made an announcement regarding the integration of its Masterpass service with the My Phillips 66 app.

Discover Financial Services’ (DFS) Direct Banking segment generated pretax income of $3.4 billion in 2017.

Discover Financial’s (DFS) stock price rose from $14.70 at the end of 2009 to $65.50 at the end of 2014. This is an increase of 346%.

Worldpay (WP) and Visa (V) said Bitcoin participants who have executed transactions on Coinbase through debit or credit card may have come across duplicate transactions.

Discover Financial Services (DFS) has a price-to-earnings ratio on an NTM (next-12-months) basis of ~8.9x, which highlights its lower valuations.

During 1Q15, Discover repurchased ~6 million shares of common stock. This resulted in a 1% decline in the common stock outstanding from the previous quarter.

Wall Street analysts gave a high estimate of $2.02 and a low estimate of $1.65 on Discover’s earnings per share for 1Q18.

Capital One repurchased 5.4 million shares in 1Q15—representing 1% of the its total outstanding shares. Its strategic priorities for 2015 haven’t changed.

Visa (V) announced its fiscal 2017 results and its fiscal 4Q17 earnings report on October 25. The consumer financial giant reported strong numbers in fiscal 4Q17.

Discover’s operating expenses increased 11% in 1Q15 over the prior year—driven primarily by higher employee compensation, marketing expenses, and legal reserves.

Analysts still love Visa (V) stock, primarily because of its strong outlook.

MasterCard (MA) has been paying dividends on its outstanding common stock for the past few quarters and is expected to continue this legacy.

PayPal’s faces competition from almost all angles. But its peer-to-peer payment service, Venmo, has become a source of great hope.

Of the 285 analysts covering the diversified financial services sub-group, there are 162 “buy,” 15 “sell,” and 108 “hold” ratings on the group.

Wall Street analysts have given a price target of $84.84 on Amex stock, which implies a rise of 0.6% from its current price level.

Payment processors are rewarding their shareholders with dividend yields of 1%–2%, depending largely on operating performance.

Apple is reportedly in talks with major banks in Canada, and it partnered with Union Pay in China last year to broaden the reach of Apple Pay.

Visa announced partnerships with the China Foundation for Development of Financial Education and the China Foundation for Poverty Alleviation.

Visa (V) reported strong net revenues in fiscal 3Q17 on the back of processed transactions, cross-border volumes, and payments volumes.

Together, the top ten investors in Discover Financial Services (DFS) stock sold 0.4 million shares in the first quarter.

Visa (V) is trading at a forward PE ratio of 27.7x, which is higher than its five-year average PE ratio of 24.5x.

Visa (V) has seen three upward revisions in its target price in April. On April 10, Cowen increased its target price for Visa from $161 to $177.

The implied volatility in Visa fell by ~12.5 percentage points from January 2 to 18.73% on April 12. Visa stock has risen ~21% during this period.

According to data released on March 29, consumer spending rose 0.1% in January. Disposable personal income fell 0.2% in January.

The Walt Disney Company is among those large American companies that have launched back-to-school programs for their employees.

A healthy job market and a steady hike in wages have increased the spending power of consumers.

Mastercard (MA) is scheduled to report its third-quarter results on October 30.

The US GDP grew 4.2% in the second quarter, which was almost double the 2.2% increase registered in the first quarter.

Visa (V) plans to report its Q4 2018 earnings on October 24. Analysts expect Visa to report EPS of $1.20, marking YoY growth of 33.3%.

The Consumer Confidence Index increased to 133.4 in August from 127.9 in July—its highest reading since its October 2000 reading of 135.8.

Improving GDP growth, a healthy job market, and steady wage growth have increased the disposable income of consumers, thereby giving them greater spending power.

Visa stock (V), which was around $78 at the beginning of 2017, now trades close to $143, a jump of over 83%.

Analysts’ rating on Mastercard (MA) improved in July compared to June.

Visa (V) has been making efforts to increase the use of contactless payments in the United States after experiencing a positive response.

Mastercard (MA) has a price-to-earnings ratio of 28.04x on an NTM (next-12-month) basis compared to the peer average of 15.95x.

In the second quarter, Mastercard (MA) witnessed total gross dollar volumes (or GDV) of $1.5 trillion.

On July 26, Discover Financial Services (DFS) released its earnings report for the second quarter.

On July 25, Visa (V) is scheduled to report its results for the third fiscal quarter. Analysts expect Visa to post an EPS of $1.09.

Mastercard (MA) is set to release its second-quarter earnings report on July 26. What can we expect?

Capital One Financial (COF) posted second-quarter results on July 19.

On July 18, American Express (AXP) is expected to report its Q2 2018. Analysts expect EPS to be $1.82 compared to $1.86 in the first quarter.

Capital One (COF) is expected to release its Q2 2018 earnings on July 19. Analysts expect EPS of $2.68, a YoY rise of 38.1%.

Growing trade tensions are a primary concern, as they could impact the performances of Discover Financial Services (DFS) and its peers.

Discover Financial Services (DFS) generated net interest income amounting to $2.1 billion in the first quarter.

The economic and business environment prevailing in an economy affects the business fundamentals of payment processing giants like Visa (V) and Mastercard (MA).

In June, eight of the 32 analysts covering the stock have given it a “buy” rating, and two analysts have given it a “strong sell.”

On June 25, the Dow Jones Industrial Average saw strong downward pressure primarily due to escalating US-China trade tensions.

The second quarter could be beneficial for American Express (AXP) due to an expected rise in consumer loans and transactions.

Visa’s (V) NTM (next-12-month) and LTM (last-12-month) price-to-book ratios are 7.6x and 8.9x, respectively.

Visa’s (V) performance is expected to be primarily driven by spending trends, electronic payment adoption, and tapping into areas where many payments are still made in cash.

For Discover Financial, nine analysts recommend a “strong buy,” eight recommend a “hold,” and ten recommend a “buy” on the stock.

At the end of the first quarter, Discover Financial’s Payment Services segment saw total volumes of $88.4 billion.

Discover Financial Services’ (DFS) Direct Banking segment generates most of its interest income from credit card loans.

Capital One’s (COF) price-to-earnings ratio stood at ~9.1x on an NTM basis compared to the average of its peers of ~16.7x.

American Express is being covered by 33 analysts, 17 of whom have recommended “holds” and two of whom have recommended “strong sells” on the stock.

American Express (AXP) incurred total expenses amounting to $6.9 billion in the first quarter, implying a rise of 9% on a YoY (year-over-year) basis.

The Global Merchant Services segment’s total revenue (after deducting interest expenses) amounted to $1.2 billion in the first quarter.

American Express’s (AXP) International Consumer and Network Services segment is affected by consumer spending levels.

Analysts expect Visa to reach $140.09 in a year, implying a 7.2% rise from the stock’s current price of $130.72.

Wall Street analysts have given Mastercard (MA) an average EPS estimate of $1.5 for the second quarter, reflecting a year-over-year rise.

While Visa’s (V) NTM (next-12-month) price-to-book ratio is 7.4x, competitors’ average is 8.0x.

At the J.P. Morgan Global Technology, Media and Communications Conference, Visa (V) stated it would be targeting the US market’s significant untapped opportunities, which could boost growth.

Mastercard (MA) released its earnings report this morning. The company reported earnings per share or EPS of $1.50 in 1Q18.

Mastercard (MA) saw positive momentum in its business in 2017 thanks to the adoption of e-commerce.

Visa’s (V) price-to-book ratio stands at 6.83x on a next-12-month basis, implying a premium valuation compared to its peer average of 3.09x.

Of its total fiscal 1Q18 net operating revenue of $4.9 billion, Visa’s service revenue made up $2.1 billion, or 44.1%.

In February 2018, Discover Financial Services (DFS) was covered by 25 analysts, of whom nine suggested a “strong buy” and five recommended a “hold” on the stock.

On February 22, Mastercard (MA) announced through a press release that around a quarter of Europeans support contactless payments through wearable devices like a keyring or smartwatch.

Visa (V) recorded strong fiscal 2017 with the help of positive momentum in cross-border volumes as well as payments volumes.

Visa (V) announced on February 2 the upgrade of various POS (point-of-sale) terminals for certain businesses in Minneapolis.

Visa (V) announced its acquisition of Fraedom, which provides payment solutions for financial institutions.

Wall Street analysts have given a one-year price estimate of $191.40 for Mastercard.

Twenty-six analysts are tracking Discover Financial Services (DFS) in January 2018. Six of them have given it a “hold” rating, and one is recommending a “strong sell.”

Discover Financial Services (DFS) has a PE (price-to-earnings) ratio on an NTM (next 12-month) basis of 10.26x, while the average for its peers is 13.97x.

The Direct Banking segment of Discover Financial Services (DFS) generated pre-tax income of $870 million in 4Q17 compared to $868 million in 4Q16, which was a marginal rise.

In 4Q17, Discover Financial incurred total operating expenses of $1 billion compared to $897 million in 4Q16, which is a rise of 15%.

As of September 30, 2017, Visa (V) reported total assets of $67.9 billion compared to $64 billion as of September 30, 2016.

Visa (V) posted a net income margin of ~35.0% in the last 12 months. American Express and Discover reported net income margins of ~13.9% and ~23.8%, respectively, in the same timeframe.

Mastercard (MA) has a PB (price-to-book) ratio of 17.24x on a next 12-month (or NTM) basis, which reflects its higher valuations.