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Behind Discover Financial Services’ Discounted Valuations

Raymond Anderson
Updated
Behind Discover Financial Services’ Discounted Valuations

Discover Financial Services (DFS) has a PE (price-to-earnings) ratio on an NTM (next 12-month) basis of 10.26x. Its peers (XLF) Ally Financial (ALLY), Fidelity National Information Services (FIS), and First Data Corporation (FDC) have PE ratios on an NTM basis of 9.78x, 20.33x, and 11.82x, respectively. Its payment services segment generated pre-tax income of $29 million in 4Q17, which represents a rise of $14 million compared to 4Q16, mainly due to a rise in transaction processing and interchange revenue and lower operating expenses.

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