Discover Value With This Credit Card Company: Discover Financial Services (DFS), Visa Inc (V), Mastercard Inc (MA)

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For the full-year, the company returned just over $1.4 billion to shareholders through buybacks and dividends. Looking forward, the three credit card companies are all looking at similar 3-5 year EPS growth rates of between 26% and 30%. Discover’s strong earnings performance and remarkably low valuations have led one analyst to claim the stock should expect upside of between 35% and 40%, recently having upgraded the stock to outperform.

Bottom Line

Having reviewed some of the metrics for Discover Financial Services (NYSE:DFS) as well as its earnings performance, it is still unclear to me why Discover Financial Services (NYSE:DFS) is trading at such a deep discount to its peers. Could it be that the market is simply undervaluing the stock? While it doesn’t have the same size in terms of market cap, the company is still performing well in a challenging environment, and should be able to continue making good money. Moreover, the stock’s low multiples allow for significant upside in the future.

The article Discover Value With This Credit Card Company originally appeared on Fool.com and is written by Daniel James.

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