Discover Financial Services (DFS) on April 19, 2016 reported net income of $575 million or $1.35 per diluted share for the first quarter of 2016, as compared to $586 million or $1.28 per diluted share for the first quarter of 2015. The company’s return on equity for the first quarter of 2016 was 21%.
First Quarter Highlights
- Total loans grew $2.7 billion, or 4%, from the prior year to $70.3 billion.
- Credit card loans grew $2.1 billion, or 4%, to $55.6 billion and Discover card sales volume increased 4% from the prior year.
- Total net charge-off rate excluding PCI loans decreased 5 basis points from the prior year to 2.21% and the total delinquency rate excluding PCI loans over 30 days past due increased 7 basis points from the prior year to 1.64%.
- Direct to consumer and affinity deposits grew $3.5 billion, or 12%, from the prior year to $32.8 billion.
- Payment Services transaction dollar volume for the segment was $45.0 billion, down 10% from the prior year.
“We made progress on our priorities this quarter, most notably accelerating loan growth into our target range,” said David Nelms, chairman and CEO of Discover. “We continue to focus on generating strong returns while prudently managing credit and effectively deploying capital.”
Discover Financial Services earnings per share showed an increasing trend of 4.6% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 609%.Analysts project EPS growth over the next 5 years at 7.76%. It has EPS annual growth over the past 5 fiscal years of 4.8% when sales grew 4.6. It reported 8% sales growth, and 5.4% EPS growth in the last quarter.
The stock is trading at $56.81, up 33.21% from 52-week low of $42.86. The stock trades down -3.1% from its peak of $59.88 and 10.97% above the consensus price target of $63.04. Its volume clocked up at 2.69 million shares which is lower than the average volume of 3.12 million shares. Its market capitalization currently stands at $23.41B.
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