Credit card issuer Discover Financial Services (
) on Tuesday posted second quarter earnings that met Wall Street's
expectations, but in a reversal of recent trends, its money set
aside to cover bad loans rose significantly from last year.
The Riverwoods, IL-based company reported second quarter net
income of $532 million, or $1 per share, compared with $593
million, or $1.09 per share, in the year-ago period.
Revenue net of interest expense rose 6% from last year to $1.85
On average, Wall Street analysts expected a matching profit of
$1 per share, on slightly lower revenue of $1.84 billion.
On a sour note, DFS said that provision for loan losses rose 32%
from last year to $232 million. Loan loss provisions are funds set
aside to cover loans a company doesn't expect to be repaid.
Discover Financial shares fell 75 cents, or -2.3%, in premarket
The Bottom Line
Shares of Discover Financial Services (
) have a 1.22% dividend yield, based on last night's closing stock
price of $32.83. The stock has technical support in the $28-$30
price area. If the stock can firm up, we see overhead resistance
around the all-time high levels of $34-$35 a share.
Discover Financial Services (
) is not recommended at this time, holding a Dividend.com DARS™
Rating of 3.4 out of 5 stars.
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