Discover Financial Services
AXP’s Valuations Down in 4Q15, Targeted $1 Billion in Savings
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.
What New Developments Can You Expect from the Fed?
Potential new developments from the Fed include a suggestion by the subcommittee on communications that median values of policymakers’ projections be published.
Mergers and Marketing Efforts Pressure MasterCard’s Margins
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.
A Look at Capital One’s Valuations
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 Opens New Position in Alliance Data Systems
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 Expected to Post Healthy Margins in Fiscal 3Q16
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.
Why Analysts Are Bullish on Diversified Financial Services Stocks
286 analysts cover the 15 stocks in the diversified financial services subgroup of the Financial Select Sector SPDR ETF (XLF).
Increased Spending, Electronic Payments Beneficial for Visa
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.
What to Expect from Visa in Fiscal Q3 2018
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.
How Payment Processors Are Performing amid Challenges in 2016
Payment processors are seeing major changes in 2016, including increased competition on pricing and the adoption of new technologies such as wearables.
Which Payment Processor Has the Highest Payouts and Repurchases?
Payment processors are rewarding their shareholders with 1%–2% dividend yields, largely dependent on operating performance.
MasterCard’s Leverage Is Comfortable for Expansion, Acquisitions
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 Certain Regions
Mastercard benefited from the Latin America region. The region witnessed favorable momentum in consumer confidence and lower unemployment.
Can American Express Distributions Continue to Attract Investors?
American Express (AXP) has been using its strong balance sheet position to consistently declare dividends to its shareholders.
What to Expect from Payment Processing Companies in H2 2018
In the first quarter, Capital One’s net income totaled $1.3 billion while Discover’s net income reached $666.0 million.
American Express: Opportunities Abound in a Challenging Market
Co-branding relationships are an important part of the American Express business model. The costs of renewing and extending these relationships is increasing.
Discover Financial Services: Assessing Analysts’ Ratings
Five analysts suggested a “hold,” one recommended a “strong sell,” and nine recommended a “strong buy” on DFS stock.
Discover Financial: Tax Cuts and Payment Services Division
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.
Why In-Store Acceptance Is Important to PayPal
PayPal’s mobile volume increased 51.0% in 1Q17 to contribute 32.0% of its total volume during the quarter.
What Does Discover Financial Have in Mind for 2018?
Discover’s 4Q17 operating margin stood at ~49.6% on a TTM (trailing-12-months) basis.
Discover Financial’s Cashback Checking Program
Discover’s enterprise-value-to-revenue ratio is ~4.0.
This Move Could Increase Mastercard’s Transaction Volumes
On April 9, 2018, Mastercard (MA) made an announcement regarding the integration of its Masterpass service with the My Phillips 66 app.
A Look at Discover’s Direct Banking Segment
Discover Financial Services’ (DFS) Direct Banking segment generated pretax income of $3.4 billion in 2017.
Investors should watch Discover’s stock in the longer term
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%.
Bitcoin Participants Saw Duplicate Transactions
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.
A Look at Discover’s Discounted Valuations
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.
Discover Financial Increases Dividends in 1Q15
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.
What’s Expected from Discover Financial in 1Q18?
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 Is Focused on Share Repurchases
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.
Why Visa Saw Strong Performance in Fiscal 4Q17
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 Net Income Declines due to Higher Expenses in 1Q15
Discover’s operating expenses increased 11% in 1Q15 over the prior year—driven primarily by higher employee compensation, marketing expenses, and legal reserves.
Analysts’ Views on Visa Stock
Analysts still love Visa (V) stock, primarily because of its strong outlook.
Will MasterCard’s Distributions Outperform Visa’s?
MasterCard (MA) has been paying dividends on its outstanding common stock for the past few quarters and is expected to continue this legacy.
The Future of PayPal: Interpreting 4Q16
PayPal’s faces competition from almost all angles. But its peer-to-peer payment service, Venmo, has become a source of great hope.
Analysts Are Bullish on Diversified Financial Services Stocks
Of the 285 analysts covering the diversified financial services sub-group, there are 162 “buy,” 15 “sell,” and 108 “hold” ratings on the group.
Is American Express a Stock for Value Investors?
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 Dividends Are Now Rising on This
Payment processors are rewarding their shareholders with dividend yields of 1%–2%, depending largely on operating performance.
Best Buy Will Support Apple Pay in 2H15
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 Establishes Partnerships to Expand in China
Visa announced partnerships with the China Foundation for Development of Financial Education and the China Foundation for Poverty Alleviation.
Visa Collaborated with PayPal to Expand in Europe
Visa (V) reported strong net revenues in fiscal 3Q17 on the back of processed transactions, cross-border volumes, and payments volumes.
Discover Financial Services: Institutional Activity
Together, the top ten investors in Discover Financial Services (DFS) stock sold 0.4 million shares in the first quarter.
Analyzing Visa’s Valuation after Its Q2 Earnings
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: Analysts Are Bullish before Its Earnings
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.
How Visa Stock Might Perform until Its Earnings
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.
What Might Drive Visa’s Q2 Earnings Growth?
According to data released on March 29, consumer spending rose 0.1% in January. Disposable personal income fell 0.2% in January.
Why Disney Is Spending $25 Million per Year on Staff Education
The Walt Disney Company is among those large American companies that have launched back-to-school programs for their employees.
Improving Economy and Retail Sales to Boost Mastercard’s Q3 Results
A healthy job market and a steady hike in wages have increased the spending power of consumers.
What Will Drive Mastercard’s Third-Quarter Earnings?
Mastercard (MA) is scheduled to report its third-quarter results on October 30.
Visa’s Q4 Results to Gain from Improving Economy and Retail Sales
The US GDP grew 4.2% in the second quarter, which was almost double the 2.2% increase registered in the first quarter.
Higher Payment Volumes to Drive Visa’s Q4 2018 Earnings
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%.
Mastercard to Gain from Improving Economy and Rising Retail Sales
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 and Retail Sales Could Boost Visa’s Platform Usage
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 Sizzles on Strong Digitization Trends and Improving Economy
Visa stock (V), which was around $78 at the beginning of 2017, now trades close to $143, a jump of over 83%.
How Analysts Rate Mastercard
Analysts’ rating on Mastercard (MA) improved in July compared to June.
Understanding Visa’s Take on Contactless Payments
Visa (V) has been making efforts to increase the use of contactless payments in the United States after experiencing a positive response.
Mastercard Has Premium Valuations after Strong Q2 2018 Results
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.
How Mastercard’s Gross Dollar Volumes and Net Revenues Trended
In the second quarter, Mastercard (MA) witnessed total gross dollar volumes (or GDV) of $1.5 trillion.
Discover Financial’s Q2 2018: Total Loans Grew 9% Year-over-Year
On July 26, Discover Financial Services (DFS) released its earnings report for the second quarter.
Visa’s Payments Volumes Could Fuel Its Growth
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’s Q2 Preview: Spending, Macro Data Could Be Drivers
Mastercard (MA) is set to release its second-quarter earnings report on July 26. What can we expect?
Capital One’s Net Interest Margin Fell in the Second Quarter
Capital One Financial (COF) posted second-quarter results on July 19.
American Express in Q2: Drivers Could Be Loan Growth, Spending
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’s Q2: Expectations Amid Trade Wars, Improved Economy
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%.
What Factors Could Influence Analysts’ Ratings on Discover?
Growing trade tensions are a primary concern, as they could impact the performances of Discover Financial Services (DFS) and its peers.
What Discover Financial Has in Mind Moving Forward
Discover Financial Services (DFS) generated net interest income amounting to $2.1 billion in the first quarter.
What’s behind Mastercard’s Co-Brand Wins?
The economic and business environment prevailing in an economy affects the business fundamentals of payment processing giants like Visa (V) and Mastercard (MA).
How Analysts View American Express Stock
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.”
What’s Affected Consumer Finance Companies Recently?
On June 25, the Dow Jones Industrial Average saw strong downward pressure primarily due to escalating US-China trade tensions.
American Express: What the Second Quarter Holds
The second quarter could be beneficial for American Express (AXP) due to an expected rise in consumer loans and transactions.
A Look at Visa’s Valuation
Visa’s (V) NTM (next-12-month) and LTM (last-12-month) price-to-book ratios are 7.6x and 8.9x, respectively.
Assessing Visa’s Growth Drivers
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.
Discover Financial Stock: Analysts’ Ratings
For Discover Financial, nine analysts recommend a “strong buy,” eight recommend a “hold,” and ten recommend a “buy” on the stock.
Discover’s Payment Services Division: What to Expect
At the end of the first quarter, Discover Financial’s Payment Services segment saw total volumes of $88.4 billion.
Discover’s Direct Banking Segment: More Credit Card Loans?
Discover Financial Services’ (DFS) Direct Banking segment generates most of its interest income from credit card loans.
A Look at Capital One’s Discounted Valuations
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.
What Could Make Analysts Warm Up to American Express Stock?
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.
Understanding the Trend in American Express’s Total Expenses
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.
Assessing Amex’s Global Merchant Services Segment’s Performance
The Global Merchant Services segment’s total revenue (after deducting interest expenses) amounted to $1.2 billion in the first quarter.
A Look at AXP’s International Consumer and Network Services
American Express’s (AXP) International Consumer and Network Services segment is affected by consumer spending levels.
This Is Why Analysts Love Visa Stock
Analysts expect Visa to reach $140.09 in a year, implying a 7.2% rise from the stock’s current price of $130.72.
How Mastercard’s Second Quarter Could Shake Out
Wall Street analysts have given Mastercard (MA) an average EPS estimate of $1.5 for the second quarter, reflecting a year-over-year rise.
How Visa’s Valuation Compares
While Visa’s (V) NTM (next-12-month) price-to-book ratio is 7.4x, competitors’ average is 8.0x.
Why Visa Sees the US Market as Profitable
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’s Strong Results Beat Earnings and Revenue Estimates
Mastercard (MA) released its earnings report this morning. The company reported earnings per share or EPS of $1.50 in 1Q18.
A Look at Mastercard’s Net Revenue
Mastercard (MA) saw positive momentum in its business in 2017 thanks to the adoption of e-commerce.
Why Visa Has Premium Valuations
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.
An Analysis of These Components of Visa’s Net Operating Revenue
Of its total fiscal 1Q18 net operating revenue of $4.9 billion, Visa’s service revenue made up $2.1 billion, or 44.1%.
How Wall Street Views these Consumer Financial Companies
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.
Why Mastercard Could Benefit from Wearable Devices
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: 2018 Expectations and a Must-Read Recap
Visa (V) recorded strong fiscal 2017 with the help of positive momentum in cross-border volumes as well as payments volumes.
Visa Upgrades Its Terminals in Minneapolis
Visa (V) announced on February 2 the upgrade of various POS (point-of-sale) terminals for certain businesses in Minneapolis.
Visa–Fraedom Acquisition to Benefit Business-to-Business Payments
Visa (V) announced its acquisition of Fraedom, which provides payment solutions for financial institutions.
A Look at Mastercard’s Valuations
Wall Street analysts have given a one-year price estimate of $191.40 for Mastercard.
Discover Financial Services: What Analysts Are Saying
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.”
Behind Discover Financial Services’ Discounted Valuations
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.
Discover Financial Services’ Direct Banking Segment in 4Q17
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.
Why Discover Financial’s Operating Expenses Rose Year-over-Year
In 4Q17, Discover Financial incurred total operating expenses of $1 billion compared to $897 million in 4Q16, which is a rise of 15%.
Analyzing Visa’s Balance Sheet
As of September 30, 2017, Visa (V) reported total assets of $67.9 billion compared to $64 billion as of September 30, 2016.
A Look at Visa’s Key Growth Factors
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.
Understanding Mastercard’s Higher Valuations
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.