DFS Earnings: Discover Financial Surges on Huge EPS Beat

Shares of Discover Financial Services (DFS) gained in after-hours trading after the company reported earnings for its second quarter of Fiscal Year 2024. Earnings per share came in at $6.06, which beat analysts’ consensus estimate of $3.08 per share. Sales increased by 17% year-over-year, with revenue hitting $4.54 billion. This beat analysts’ expectations by $360 million.

The company’s strong performance can be attributed to its loan growth and higher non-interest revenue, which ultimately led to higher profit margins.

Discover is also working to address its legal issues. In fact, it entered into an agreement to sell its student loan assets, which will resolve litigation in its Payment Services segment. In addition, the firm is entering into a class action settlement agreement for a card misclassification matter.

Interestingly, Discover’s move to offload its student loan portfolio is considered a bullish catalyst by analysts, according to TipRanks’ Bulls Say, Bears Say tool. However, on the bearish side, they expect loan growth to continue slowing going forward.

Is DFS Stock a Buy or Sell?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on DFS stock based on three Buys, eight Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 19% rally in its share price over the past year, the average DFS price target of $137.67 per share implies 2.64% downside risk. However, it’s worth noting that estimates will likely change following today’s earnings report.