We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Discover Financial Announces Stress Capital Buffer Results
Read MoreHide Full Article
Discover Financial Services (DFS - Free Report) recently announced results for the Federal Reserve’s 2020 supervisory stress testing and capital plan review exercise. The company’s preliminary stress capital buffer (SCB) has been set at 3.5%.
The final SCB results for Discover Financial as well as other firms are subject to Federal Reserve’s capital plan rule, which will be finalized in August and effective Oct 1, 2020.
Although the company has been suffering from the economic slowdown caused by the COVID-19 pandemic, it managed to maintain a healthy capital position. Over the years, it implemented several capital-boosting initiatives including equity and debt offerings, which helped the company achieve a strong capital base. The solid capital and cash status facilitates efficient deployment of excess capital through acquisitions, share repurchases and dividend payouts.
Pending certain approvals, Discover Financial has plans to continue with its dividend payouts with a clearance of 44 cents per share for the third quarter of 2020. Its current dividend yield stands at 3.6%, higher than its industry's metric of 2.8%. Although the company suspended its share buyback plan in March and refrains from repurchases in the third quarter as well, we are hopeful that it will resume the action once things bounce back to normalcy.
Subject to the SCB and other conditions, the company will take share repurchase measures.
The company's solvency level remains impressive. Net debt is 41.6% (almost in line sequentially) of its total capital, lower than the industry average of 48.8%. Its times interest earned now is 4.1X (in line sequentially), better than the industry average of 2.7X. As of Mar 31, 2020, it had cash and cash equivalents of $1 billion and credit facilities through private providers of $6 billion, higher than its long-term debt of $2.6 billion. It also has $35 billion in borrowing capacity at the Federal Reserve discount window. Thus, its balance sheet looks strong.
The company is well-poised for growth on the back of its business mix, capital efficiency, healthy revenue stream, growing PULSE network, etc.
Zacks Rank and Price Performance
Shares of this currently Zacks Rank #3 (Hold) company have lost 35.5% in a year’s time, wider than its industry’s decline of 29.4%.
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Discover Financial Announces Stress Capital Buffer Results
Discover Financial Services (DFS - Free Report) recently announced results for the Federal Reserve’s 2020 supervisory stress testing and capital plan review exercise. The company’s preliminary stress capital buffer (SCB) has been set at 3.5%.
The final SCB results for Discover Financial as well as other firms are subject to Federal Reserve’s capital plan rule, which will be finalized in August and effective Oct 1, 2020.
Although the company has been suffering from the economic slowdown caused by the COVID-19 pandemic, it managed to maintain a healthy capital position. Over the years, it implemented several capital-boosting initiatives including equity and debt offerings, which helped the company achieve a strong capital base. The solid capital and cash status facilitates efficient deployment of excess capital through acquisitions, share repurchases and dividend payouts.
Pending certain approvals, Discover Financial has plans to continue with its dividend payouts with a clearance of 44 cents per share for the third quarter of 2020. Its current dividend yield stands at 3.6%, higher than its industry's metric of 2.8%. Although the company suspended its share buyback plan in March and refrains from repurchases in the third quarter as well, we are hopeful that it will resume the action once things bounce back to normalcy.
Subject to the SCB and other conditions, the company will take share repurchase measures.
The company's solvency level remains impressive. Net debt is 41.6% (almost in line sequentially) of its total capital, lower than the industry average of 48.8%. Its times interest earned now is 4.1X (in line sequentially), better than the industry average of 2.7X. As of Mar 31, 2020, it had cash and cash equivalents of $1 billion and credit facilities through private providers of $6 billion, higher than its long-term debt of $2.6 billion. It also has $35 billion in borrowing capacity at the Federal Reserve discount window. Thus, its balance sheet looks strong.
The company is well-poised for growth on the back of its business mix, capital efficiency, healthy revenue stream, growing PULSE network, etc.
Zacks Rank and Price Performance
Shares of this currently Zacks Rank #3 (Hold) company have lost 35.5% in a year’s time, wider than its industry’s decline of 29.4%.
Other companies in the same space, such as Synchrony Financial (SYF - Free Report) , Ally Financial Inc. (ALLY - Free Report) and American Express Company (AXP - Free Report) have also lost 35.5%, 23.1% and 35.8%, respectively, in the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>