Banking, finance, and taxes
Is Discover Financial Becoming a Bargain?
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The financial sector underperformed the Dow Jones Industrial Average in January. In fact, financial stocks dropped 10% in the month, compared with a drop of 6.5% in the Dow. Big bank stocks had a rough month, but credit card issuers American Express Co. (NYSE: AXP) and Discover Financial Services (NYSE: DFS) did worse. American Express dropped nearly 24% in the month and Discover dropped more than 15%.
Discover’s shares closed near $48 on the day before it reported fourth-quarter results, dropped nearly $4 the next day and posted a new 52-week low of $44.67 on Friday. The decline was all about missing profit estimates, primarily the result of slow growth in the credit card business.
The profit miss does not appear to have moved ratings on the stock, although several analysts firms have cut their price targets. Here’s a rundown:
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