DFS Stock Intrinsic Value – DISCOVER FINANCIAL SERVICES Reports Record-Breaking Q2 Earnings for FY2023
August 26, 2023
🌥️Earnings Overview
On July 19th 2023, DISCOVER FINANCIAL SERVICES ($NYSE:DFS) reported their Q2 FY2023 earnings. Compared to the same quarter in the previous year, revenue increased to USD 3.9 billion, a 20.5% change, while net income decreased by 18.9%, amounting to USD 0.9 billion.
Stock Price
On Wednesday, DISCOVER FINANCIAL SERVICES reported record-breaking earnings for the second quarter of FY2023, with its stock opening at $121.5 and closing at $121.8, up by 0.1% from the previous day’s closing price of 121.7. The impressive earnings are attributed to the company’s strong performance in a range of areas, including consumer banking, credit card lending, student loan servicing, and personal loans. DISCOVER’s consumer banking services saw a surge in deposits, while its credit card lending division experienced an increase in the number of customers and average credit card balances.
Additionally, the student loan servicing and personal loan offerings both had strong growth over the reported quarter. DISCOVER’s strong performance can also be attributed to its focus on increasing customer satisfaction and providing superior customer service. To that end, the company has invested heavily in digital capabilities to provide a seamless customer experience. This has enabled DISCOVER to expand its customer base and secure repeat business from existing customers. These strong results demonstrate DISCOVER FINANCIAL SERVICES’ commitment to providing high-quality financial services and innovative products to its customers. This impressive performance is expected to continue in the upcoming quarters, thus guaranteeing strong returns for shareholders in FY2023. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for DFS. More…
| Total Revenues | Net Income | Net Margin |
| 14.83k | 3.82k | 26.4% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for DFS. More…
| Operations | Investing | Financing |
| 7.2k | -25.64k | 16.06k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for DFS. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 138.08k | 124.23k | 57.26 |
Key Ratios Snapshot
Some of the financial key ratios for DFS are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 9.2% | – | – |
| FCF Margin | ROE | ROA |
| 46.8% | 22.3% | 2.3% |
Analysis – DFS Stock Intrinsic Value
At GoodWhale, we recently conducted a comprehensive analysis of DISCOVER FINANCIAL SERVICES’ fundamentals. We found that DISCOVER FINANCIAL SERVICES’ intrinsic value is approximately $141.5. To calculate this value, we utilized our proprietary Valuation Line tool. Currently, DISCOVER FINANCIAL SERVICES’ stock is trading at $121.8. This means that it is currently undervalued by 13.9%. More…
Peers
Discover is headquartered in Riverwoods, Illinois and has operations in the United States, Canada, and the United Kingdom. The company’s primary competitors are SoFi Technologies Inc, American Express Co, Enova International Inc.
– SoFi Technologies Inc ($NASDAQ:SOFI)
SoFi Technologies Inc is a company that provides financial services. As of 2022, its market cap is 4.77B. The company offers products and services such as student loan refinancing, personal loans, and mortgages. It also has a mobile app that allows users to track their spending and manage their finances.
– American Express Co ($NYSE:AXP)
American Express Co is a financial services company with a market cap of 105.83B as of 2022. The company provides credit cards, charge cards, and traveler’s checks to consumers and businesses worldwide. It also operates an online travel portal and a global network of branded merchandise stores. In addition, American Express Co provides financial advisory, risk management, and insurance services to businesses and individuals.
– Enova International Inc ($NYSE:ENVA)
Enova International Inc is a provider of online financial services. The company offers loans, lines of credit, and merchant cash advances to small businesses and consumers. Enova International Inc has a market cap of 996.81M as of 2022, a Return on Equity of 19.42%. The company’s primary product is its small business loan product, which offers loans of up to $150,000.
Summary
DISCOVER FINANCIAL SERVICES reported an impressive 20.5% year-on-year revenue growth for its Q2 FY2023, totalling USD 3.9 billion; however, net income decreased 18.9% year-on-year to USD 0.9 billion. This signals that the company’s profitability remains below pre-pandemic levels, despite the impressive revenue growth. In terms of investing, DISCOVER FINANCIAL SERVICES may be a good short-term option as the company’s revenue is growing, but the sustainability of this growth remains to be seen. Investors should consider whether or not the company is taking the right steps to build a sustainable and profitable business model in the long-term.
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