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Fundamental analysis: Discover Financial Services (DFS)

Awarener score: 8.7

Conclusion

Note: All scores range from 1 (worst) to 10 (best). Conclusions are updated daily with closing stock prices and new reported quarterly financial statements.

Revenue score: 6.5

• Business has been slightly shrinking. It's been below average when measured against peer companies.
• Discover Financial Services business trend stability is excellent. The higher the stability, the lower the risk. It looks better than most rivals.

Margins score: 7.7

• DFS profit margins -on goods and services sold- are usually extremely poor. They stand mediocre against rival companies.
• Business profit on sales tends to be hardly sufficient. It's weak when measured against competitors.
• Profits on sales made -available to repay debt and purchase properties- are usually huge. They remain a slight improvement compared to peers.
• Earnings -before income taxes and interests on loans taken- tend to be huge in relation to total revenues. They're still somewhat better than similar companies.
• Profits -before income taxes- are usually huge considering total sales, and remain more than average in relation to rivals.
• Total net profit tends to be excellent when confronted to sales. Company stands more than average in relation to comparable firms.

Growth score: 8.2

• Discover Financial Services has an unknown gross margin growth, as there is not enough data to analyze. It's been impossible to compare to competitors.
• There is not sufficient data to estimate the operating income margin trend, which has been therefore unknown against comparable firms.
• Profits -available to repay debt and purchase properties- have been growing at a good pace, which compares encouraging in relation to peer enterprises.
• Earnings -before income taxes and interests on loans taken- have been growing at a good tempo. It turns to be in good shape compared to similar stocks.
• In past years, profits -before income taxes- grew at an excellent speed. It was top-notch against rivals.
• In the previous years, growth trend on total net profit has been excellent, and great when measured against peer companies.
• Earnings per share have grown at an excellent rhythm in past years. It's been impressive in relation to industry peers.

Miscellaneous score: 5.0

• DFS had to pay some income taxes in relation to profits made in the past years. It's been somewhat worse than peers.
• The company does not report R&D expenses. It's meaningless to measure in relation to competitors.
• We have insufficient data to estimate how effective is research and development effort. It stands unknown against rival companies.

Profitability score: 8.2

• Discover Financial Services usually gets good returns on the resources it controls. It proves almost average when measured against peer firms.
• The company normally gets excellent proceeds -on the resources directly invested in the business-. They remain in good shape compared to similar companies.
• Profitability -in relation to owned resources- is usually paramount. It ranks more than average in relation to competitors.
• In the past, got good returns -on the tangible resources it controls-. This metric is usually related to the industry in which operates and combines profitability versus reinvestment needs. It's almost average when measured against comparable enterprises.

Usage of Funds score: 7.9

• DFS usually uses a sparse portion of genuine funds generated to buy or replace property, plant, or equipment. The need for reinvestments is modest. It stands almost average when measured against rival firms.
• The company is usually replacing part of the property, plant, and equipment that gets old, keeping some funds for something else. It can't keep forever, which is below average when measured against industry peers.
• In the past twelve months it paid some dividends, considering the current stock price. It came somewhat worse than competitors.
• Has somewhat increased dividend payments in the past years. Business prospects may have improved. The company has behaved close to average when compared to similar firms.
• Dividend payments usually represent a non-significant portion of genuine funds generation and are likely very safe. Sustainability looks better than most comparable companies.
• The company usually significantly reduces the pool of investors, resulting in fewer mouths feeding on the pie of profits. It remains in good shape compared to peer enterprises.
• Repurchase effectiveness metric is very complex. Run again in analytical mode if you're interested in a technical explanation. It stands impressive in relation to rivals.
• The company uses a non-significant portion of genuine fund generation to reward investors. The company is usually improving its financial position, and could greatly boost stockholder rewards if it wished so. It still looks more than average in relation to competitors.

Balance Sheet score: 7.0

• Discover Financial Services intangible assets (like brands and goodwill) represent a non-significant portion of resources controlled, according to accounting books, which is safer. It happens to be similar to peer companies.
• The company has plenty short-term resources to face short-term obligations. There're no liquidity concerns. It turns to be impressive in relation to similar firms.
• Roughly a tenth of resources controlled were provided for with financial debt. Creditors have minor claims on the company, and financial position is safe. It remains slightly worse than rival firms.
• A substantial portion of resources controlled are already cash or short-term investments, which is better for liquidity. It looks great when measured against rivals.
• For every dollar of short-term obligations, the company has plenty of dollars in cash and short-term receivables. It's impressive in relation to peer firms.
• For every dollar of short-term obligations, the company has plenty of dollars in cash and equivalents, which is top-notch against similar enterprises.
• Usually, sales are on many months credit. It still ranks last-in-rank when measured against peers.
• Days of inventory outstanding are not known. It comes up as a big question mark against competitors.
• We could not gauge the normal operating cycle of the company. It happens to be a mystery against peers.
• Unfortunately, we had not enough data to estimate the days of payables outstanding. It ranks unknown against industry peers.
• Cash conversion cycle remains unknown, due to not having enough inputs. It's incomparable against similar companies.
• Company earns net interest income on its investments and therefore is in a quite comfortable financial position. It stands top-notch against rival firms.
• Business earnings have usually been quite good when measured against loans taken. Cutting back reinvesting in the business, it could take around three years to repay the obligations with current profitability. It ranks similar to comparable enterprises.
• Revenues are excellent in relation to property, plant, and equipment required to operate. This metric is likely dependent on the industry the company operates in. Low property, plant, and equipment requirements, allows the company to keep more money to reward stockholders in the long run. It looks a slight improvement compared to similar firms.
• Resource exploitation is very low when yearly sales are considered, business volume must be greatly increased. This metric is normally tied to the industry where the firm belongs. It's still worse than most peer companies.

Valuation score: 8.4

• Discover Financial Services looks very cheap in relation to profits and financial position. It happens to be more than average in relation to competitors.
• Price-to-Tangible-Book-Value is a fairly complex metric. Run again in analytical mode if you're interested in a technical explanation. It remains close to average when compared to peers.
• In the past twelve months, the company generated extraordinary free funds in relation to the stock price, which stands top-notch against similar companies.
• The company usually generates plenty more genuine funds to cover up for its business needs. Surplus cash may be used to repay loans, to eventually buy new businesses, or to reward investors. Considering the financial position and stock price, at the current price the share looks to be very attractive. It's still top tier when measured against industry firms.
• In the past twelve months, the company has significantly rewarded investors, considering both dividends and share on the pie of earnings. It came up a slight improvement compared to peer ventures.
• The company has more cash than debt. It might be poised to increase stockholder payments, or to fund new business projects. It looks somewhat better than similar enterprises.
• Considering the past twelve months, traditional Price-to-Earnings relation looks very cheap. Possible reasons are that the market might be betting current earnings will be hard to sustain through time, or that the company has very high fund needs, or a weak financial position, among others. If that isn't the case, the current stock price might be very attractive. It ranks encouraging in relation to peer companies.
• Comparing the current stock price with the past twelve-months revenues gives a three or four to one relationship. This is an important metric to check its evolution through time, and to compare to industry peers. It looks lacking compared to rival firms.
• The relation between the stock price and accounting book value is somewhat high. It's important both to check this metric through time and to compare it with rival companies. The company remains somewhat worse than peer firms.
• In the past twelve months, the operating business earned huge money when compared to the current stock price and financial position. It happens to be more than average in relation to industry peers.
• In an alternate metric of bang for the buck, the company has usually shown an extreme earnings power ability when measured against the current stock price and financial position. Further analysis is recommended, as the stock might currently be significantly undervalued. It's still in good shape compared to peer companies.

Total score: 7.4

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Awarener score: 8.7

Conclusion

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