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Discover Financial Hits 52-Week High on Strong Q2 Earnings

On Aug 15, 2016, shares of Discover Financial Services DFS hit a 52-week high of $58.55 driven by strong second-quarter 2016 results. About 2.1 million shares exchanged hands in the last trading session and the stock finally closed at $58.21, up 0.07%.

The stock seems to have gained from robust quarterly earnings of $1.47 per share that surpassed the Zacks Consensus Estimate by 3.5%. The bottom line also improved 10.5% year over year on higher loan growth and increased net interest margin. Notably, this Zacks Rank #3 (Hold) Consumer Loans provider delivered an average positive surprise in three of the last four quarters.

Discover Financial has cemented investors’ confidence after having fulfilled the terms of the Federal Reserve's Comprehensive Capital Analysis and Review process recently. It received approval from the Fed with respect to its proposed capital actions for the four quarters ending Jun 30, 2017. This reflects the company’s adequate capital and stable capital structure even amid various stress-test scenarios. It also implies that the insurer is well positioned to undertake planned capital distributions, such as dividends and share repurchases, in line with the regulatory body’s minimum capital requirements. Pursuant to the capital plan, Discover Financial can now repurchase almost $2 billion of its stock over the next 12 months. In addition, it  hiked its quarterly dividend by 7% last month.

Backed by earnings outperformance, the Zacks consensus Estimate was also moved north as most of the estimates were revised higher over the last 7 days. The same increased to $5.70 for 2016 and $6.11 for 2017.

DISCOVER FIN SV Price and Consensus

DISCOVER FIN SV Price and Consensus | DISCOVER FIN SV Quote

Stocks that Warrant a Look

Some better-ranked stocks from the same industry like Credit Acceptance Corp CACC, Regional Management Corp. RM and EZCORP Inc. EZPW. While Credit Acceptance and Regional Management sport a Zacks Rank #1 (Strong Buy), EZCORP holds a Zacks Rank #2 (Buy).

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DISCOVER FIN SV (DFS): Free Stock Analysis Report
 
EZCORP INC CL A (EZPW): Free Stock Analysis Report
 
CREDIT ACCEPT (CACC): Free Stock Analysis Report
 
REGIONAL MANAGE (RM): Free Stock Analysis Report
 
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