News

Discover (DFS) came out with quarterly earnings of $1.54 per share, missing the Zacks Consensus Estimate of $2.50 per share. This compares to earnings of $3.77 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -38.40%. A quarter ago, it was expected that this credit card issuer and lender would post earnings of $3.15 per share when it actually produced earnings of $2.59, delivering a surprise of -17.78%.

Over the last four quarters, the company has not been able to surpass consensus EPS estimates.

Discover, which belongs to the Zacks Financial - Consumer Loans industry, posted revenues of $4.2 billion for the quarter ended December 2023, surpassing the Zacks Consensus Estimate by 2.41%. This compares to year-ago revenues of $3.73 billion. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Discover shares have lost about 2.4% since the beginning of the year versus the S&P 500's decline of -0.1%.

What's Next for Discover?

While Discover has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Discover: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $3.27 on $4.03 billion in revenues for the coming quarter and $12.48 on $16.6 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial - Consumer Loans is currently in the bottom 20% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Mr Cooper (COOP), another stock in the same industry, has yet to report results for the quarter ended December 2023. The results are expected to be released on February 9.

This reinsurance company is expected to post quarterly earnings of $1.81 per share in its upcoming report, which represents a year-over-year change of +110.5%. The consensus EPS estimate for the quarter has been revised 2.5% lower over the last 30 days to the current level.

Mr Cooper's revenues are expected to be $402.37 million, up 32.8% from the year-ago quarter.

Only $1 to See All Zacks' Buys and Sells

We're not kidding.

Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.

Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services likeSurprise Trader, Stocks Under $10, Technology Innovators,and more. They've already closed 162 positions with double- and triple-digit gains in 2023 alone.

See Stocks Now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

MR. COOPER GROUP INC (COOP) : Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.