Discover Financial Services (DFS) - Bull of the Day

By Zacks.com,  April 03, 2012, 01:00:01 AM EDT

Discover Financial Services' ( DFS ) first quarter earnings was substantially ahead of the Zacks Consensus Estimate on higher transaction and credit card sales volumes and lower loan loss provisions, along with record-low delinquency and charge-off rates. Higher consumer spending and merchant acceptance contributed to the substantial expansion of income across segments.

Additionally, a dividend increase and share buyback have also injected optimism. The company has a strong inorganic growth policy, which apart from boosting earnings also fosters portfolio diversification.

The company's extensive network, sound capital position, rapidly expanding acceptances and cost containment initiatives will help accentuate growth over the long term. Our six-month target price of $38.00 equates to 10.6x our earnings estimate for 2012. Given the annual cash dividend of $0.40, this price target implies an expected total return of 20.7% over that period.
 
DISCOVER FIN SV ( DFS ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Investing Ideas, Stocks

Referenced Stocks: DFS



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