Discover Financial Services (DFS)
The Company is in the business of credit card issuer and electronic payment services.
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This met a high level screen to indicate a buy and strong outperform against its peers (other tickers in its industry). My 1st version of this spreadsheet devles deep into the company's balnace sheet and recent income statements, combined with other relevant price data for the company including insider/institutional holdings, short interest, debt levels, etc.
Testing capabilities of this 1st version of my automated, valuation spreadhseet matched with my personal criteria and see how it holds up.
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Another bet against credit cards
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I am going to do a Cross Sectional Analysis on five of the largest credit card companies, analyze the risk involved with the industry and determine on a relative basis which stock is undervalued. The companies I am evaluating are Discover Financial, American Express, Visa, Capital One and MasterCard…
Read the report at
http://stocklook.blogspot.com/
Or after Wednesday, October 28
http://stocklook.blogspot.com/2009/10/credit-card-stocks-dfs-axp-v-cof-and-ma.html
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P/E ratio is 6.25x. Great earnings growth. Although I can honestly say I don't know a single person who carries a Discover card, somebody must be using them.
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paid out a dividend of $0.02
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Oh, by the way, earnings are coming up this next week and i have some bad news.
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This company has horrendous customer service. Companies who cannot take care of the customer will Not survive this recession.
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I recently ran into this article on an Ultra oil ETF strategy:
http://www.howtowriteoptions.com/ultra-covered-call-strategy-fails
By shorting each side of the Long/Short ETFs I will eventually come up on the positive end. Not sure how effective this will be in real life but long term on CAPs combo-ing these ETF is a sure winner.
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Why does everybody hate Discover?!
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Once some of the delinquent accounts are cleared from the books, stack will begin a slow but steady rise forthe longer term.
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Its run 200% from the lows. I dont have the card but its interest rates suck, and they moved their payment schedule back about 4 days on customers while raising late payment fees while saying default rate is around 5%. In this economy you dont want to piss off your customer whom your holding undsecured debt for. This is just asking for non payment, lost customers and a bad reputation that will hurt future business. Moving a payment schedule like this tells me they are desparate to make the numbers! Very desparate.
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Risk has been priced out of the stock at these prices. Very strong customer profile.
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This stock is a hangover-wake up stock, the fading fad of the yuppie crowd, of the down-towns white collar community. It doesn't pay a divident, trades at P/E:50, it doesn't own the real-estate it occupies, I can't see why the per share value
is $3.50, ( roasting machines and, what else?) they are not a desirable buy-out target, the competition with equal quality, but cheaper priced product is gaining bigger share of the market, so somebody please explain to me why an investor would buy this stock at all,
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More and more people are losing their jobs. Foreclosures are up. Stimulus checks are being sent out----so ppl will keep and save the cash. Use the cash on things like the mortgage, car payments, and other bills that can not be paid with CREDIT CARDS. Then they will use the CC for everything else--gas--groceries--cell phones--EVERYTHING.
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Financial? Blah...
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How low can it go? No one knows.
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Great cash position.
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Cash on hand worth $20.
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This is solely based on the positive outcome of the Visa/MC lawsuit.
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Discover seems to have a slightly younger consumer base as compared to VISA and Matercard. Their customers probably have less on the line in terms of investments than other card holders.

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