Thursday, December 17, 2009

Discover Financial Biggest Mover

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Discover Financial Services (DFS)

Reports disappointing 4th quarter results with net income of $371 million or $0.63 compared to $432 or $0.89 last year. For the year end results net income of $1,294 million or $2.42 EPS compared to $928 million or $1.92.

Along with the disappointing results of DFS 4th quarter new unemployment claims rose 7,000 last week when economists were anticipating a decline. This brings a new reality that the recovery will likely be slower than many have hoped. With high unemployment DFS will more than likely continue to experience poor performances.

DFS is down today nearly 10% due to these two factors. The stock price has done relatively well for the past few weeks because of optimism and upgrades. Missing expectations on earnings puts a damper on the momentum but I still feel DFS is a good stock that will experience more growth than any of the other credit card companies. This means that today could be a good day to get a 10% discount on DFS.

For year end results Discover did perform better than last year and experience growth in deposits for its Discover Bank and student loans also increased. The biggest concern for DFS is the decline in sales volume of 1%. This is DFS main source of revenue, which may remain flat until consumer confidence and spending pickup.


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