Credit card issuer Discover Financial Services ( DFS ) on Thursday said its third quarter earnings declined due to growing legal costs, although its profit and revenue totals still beat Wall Street's expectations.
The Riverwoods, IL-based company reported third quarter net income of $627 million, or $1.21 per share, compared with $649 million, or $1.18 per share, in the year-ago period.
Revenue rose nearly 10% from last year to $1.96 billion.
On average, Wall Street analysts expected a much smaller profit of $1.03 per share, on lower revenue of $1.9 billion.
On a sour note, DFS said its loan loss provisions rose 26% from the same period last year, to $126 million. However, provisions were down significantly on a sequential basis from the second quarter, when the funds set aside to cover bad loans totaled $232 million.
Discover shares rose $1.16, or +3.2%, in premarket trading Thursday.
The Bottom Line
Shares of Discover Financial Services ( DFS ) have a 1.08% dividend yield, based on last night's closing stock price of $37.02. The stock has technical support in the $32-$34 price area. The shares are trading near all-time highs.
Discover Financial Services ( DFS ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.
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