Breaking News
Get 40% Off 0
🔎 See NVDA's full ProTips for an instant risks or rewards Claim 40% OFF

Discover Financial Services shares edge up on plans to exit student loan market

Published Dec 01, 2023 06:28
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
DFS
+12.61%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Discover Financial Services (NYSE:DFS) has announced it will cease accepting new student loan applications by early next year. This strategic move is part of a broader initiative to simplify the company's operations and may include the sale of its student loan portfolio. The announcement was made on Wednesday and comes at a time when the company is navigating through a series of governance and regulatory challenges.

The market responded positively to Discover's plan on Thursday, with the company's stock price ticking up to $93.12.

Discover's decision to streamline its business model aligns with the broader industry trend of financial institutions reassessing their product portfolios in light of regulatory pressures and market conditions. The company has been under scrutiny for its practices, which culminated in a $35 million settlement over past compliance disputes related to debt collection practices. Furthermore, since July, Discover has halted share repurchases due to an ongoing internal review concerning governance issues.

These developments occur as Discover is in the midst of selecting a new Chief Executive Officer. The incoming CEO will inherit a company that is working to reposition itself amidst broader economic concerns. These include the potential impact of a recession on consumer spending and credit card defaults, which are critical factors for a company with a significant presence in the credit card market.

InvestingPro Insights

As Discover Financial Services (DFS) refocuses its business strategy, real-time data from InvestingPro offers a glimpse into the company's financial health and market position. With a market capitalization of $23.34 billion and an attractive price-to-earnings (P/E) ratio of 6.86, which adjusts to an even lower 6.42 for the last twelve months as of Q3 2023, Discover presents a value investment opportunity. The company's revenue for the same period stands at $10.44 billion, despite experiencing a slight decline of 3.08%.

InvestingPro Tips highlight Discover's high earnings quality, as evidenced by free cash flow exceeding net income, and a strong return on invested capital. These factors are crucial for investors seeking companies with solid financials and the ability to generate shareholder value. Additionally, Discover's management has been actively buying back shares, which can be a sign of confidence in the company's future and a potential boost for stock prices.

For those interested in income-generating investments, Discover has a track record of raising its dividend for 13 consecutive years, with a dividend yield of 3.15% as of the end of November 2023. This commitment to returning value to shareholders is further supported by the company's ability to maintain dividend payments for 17 consecutive years.

Investors looking for more insights can find additional InvestingPro Tips on Discover's performance and outlook, with a total of 13 tips available. With the current Cyber Monday sale, subscriptions to InvestingPro are now available at a discount of up to 60%. Plus, using the coupon code sfy23, readers can get an additional 10% off a 2-year InvestingPro+ subscription, which includes valuable tips and analysis to help make informed investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Discover Financial Services shares edge up on plans to exit student loan market
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email