Discover Financial Services-Discover Financial Stock Topped The Estimates In Q2, Where Is It Headed?

Core Insights - Capital One plans to acquire Discover Financial Services, merging two of the largest credit-card companies in the U.S. [1] - Discover Financial's stock has increased by 26% year-to-date, outperforming the S&P 500's 17% rise, while Capital One's stock has risen by 15% [1] - Discover Financial's current stock price is $143, which is 3% above its fair value estimate of$ 138 [1] Financial Performance - Discover Financial reported net revenues of $4.5 billion in Q2 2024, a 17% increase year-over-year, driven by a 45% rise in non-interest revenues and an 11% increase in net interest income [2] - The company's adjusted net income improved by 70% year-over-year to$ 1.5 billion in Q2 2024 [2] - For FY 2023, net revenues grew 19% year-over-year to $15.86 billion, with net interest income and non-interest revenues both increasing by 19% and 20%, respectively [3] - The adjusted net income for FY 2023 decreased by 33% year-over-year to$ 2.86 billion due to a significant rise in provisions for credit losses and operating expenses [3] Future Outlook - Discover Financial's revenues are projected to reach $16.86 billion in FY 2024, with an annual GAAP EPS expected to be around$ 11.81 [3] - The company's valuation is anticipated to be around $138 based on a P/E multiple of just below 12x [3]