$DFS Discover Cash BackVery upside channel here. Bullish pennant/ bullish falling wedge forming. $200 easy. Could get away with $180c for 1/17/2025 for a nice grab but low OI/VOL. Good looking chart, nonetheless.
Wall Street LSR
0IBC trade ideas
$DFS with a bullish outlook following its earnings #StocksThe PEAD projected a bullish outlook for NYSE:DFS after a positive under reaction following its earnings release placing the stock in drift A with an expected accuracy of 50%.
DFS Discover Financial Services Options Ahead of EarningsAnalyzing the options chain and the chart patterns of DFS Discover Financial Services prior to the earnings report this week,
I would consider purchasing the 145usd strike price Calls with
an expiration date of 2025-1-17,
for a premium of approximately $11.25.
If these options prove to be profitable prior to the earnings release, I would sell at least half of them.
Planning for Next Earnings Season: DFSNYSE:DFS has a platform trend since the highs and lows are very consistent, suggesting controlled buying over time. It had a compression pattern before the pop out of the box white candle and a small gap up candle as the first attempt to break out to the upside. The stock may drop back into the platform range but if it holds, it's a good indication that earnings have improved. This is an example of a good pattern to watch for a pre-earnings run setup with potential to swing trade to earnings. Discover reports July 17th.
Discover is Getting Bought By Capital OneCapital One made it seem like they were "partnering or buying" Discover but in reality, Capital One is bailing them out and trying to save them.
Discovering is going to fail unless capital one cleans up the debt and books, every person I know who had credit card debt has one of there cards hahahahaha.
We may see some misleading news that will make it pump short term but overall, put swings going into the summer 90+ days out doesn't seem like to bad of a move.
We can ALREADY SEE UNEMPLOYMENT RISING, WHAT HAPPENS WHEN AMERICANS CAN PAY THERE BILLS?!?!?!
DFS Gap Fill and continue to downsideCorrection taking place and this gap fill could be phase B of the ABC correction. Short term swing.
Capital One Buying Discover Financial For $35.3 BillionCapital One Financial announced its $35.3 billion all-stock acquisition of Discover Financial ( NYSE:DFS ). This landmark deal, poised to reshape the credit card industry, comes at a time of heightened regulatory scrutiny and strategic maneuvering.
Unlocking Value Through Synergies:
Capital One's ( NYSE:DFS ) strategic vision for the acquisition hinges on unlocking synergies to drive operational efficiency and enhance shareholder value. With projected synergies of $1.5 billion by 2027, the combined entity aims to streamline operations and capitalize on economies of scale.
Antitrust Scrutiny and Regulatory Hurdles:
Analysts caution that the deal will face intense antitrust scrutiny, considering Capital One and Discover's significant presence in the highly concentrated credit card market. Regulators are expected to closely scrutinize the potential impact on market competition and consumer choice, raising concerns about potential roadblocks.
Navigating Regulatory Complexities:
Despite the regulatory challenges ahead, Capital One remains optimistic about navigating the complex regulatory landscape. The company is prepared to engage with regulators and address concerns proactively, emphasizing the long-term value creation potential of the merger.
Market Reaction and Investor Sentiment:
Investors responded positively to the announcement, driving Discover Financial's stock price to its highest level in nearly two years. The surge in share price underscores investor confidence in the strategic rationale behind the acquisition and the potential for value creation.
Implications for the Credit Card Industry:
The merger between Capital One and Discover Financial ( NYSE:DFS ) is set to reshape the competitive dynamics of the credit card industry. As the largest player in a highly concentrated market, the combined entity will wield significant influence, potentially triggering further industry consolidation and competitive responses.
Conclusion:
Capital One's bold move to acquire Discover Financial ( NYSE:DFS ) marks a pivotal moment in the evolution of the credit card industry. Despite regulatory hurdles and antitrust scrutiny, the potential synergies and value-creation opportunities are poised to drive long-term growth and profitability.
Top stock picks for the next years No 10 Discover Financial I am publishing a series of the best stocks with the highest growth rates that I expect over the next few years. Today with the Discover Financial Services share with a target price of 211$
Navigating Opportunities: $DFS in the Face of Q4 Headwinds
Discover Financial Services (NYSE: NYSE:DFS ) recently faced a challenging fourth quarter, reporting a significant dip in net income and diluted earnings per share amidst rising charge-offs. Despite this, the company showcased resilience in key areas, with robust loan growth and revenue expansion. We delve into the details of Discover's performance, the factors influencing its financial landscape, and the strategic moves it is making to navigate the current market conditions.
Financial Snapshot:
Discover's Q4 financials reveal a 62% drop in net income to $388 million, with diluted earnings per share plummeting to $1.54 from $3.74 in the same quarter of the previous year. The company experienced a noteworthy 15% increase in total loans, reaching $128.4 billion, while total revenue net of interest expense grew by 13% to $4.196 billion. However, the total net charge-off rate spiked significantly to 4.11%.
Operational Performance and Challenges:
Discover Financial Services operates in the competitive landscape of direct banking and payment services, issuing credit and debit cards, alongside providing various consumer banking products. The company's 2023 performance saw substantial asset and deposit growth, maintaining a resilient net interest margin. However, increased net charge-offs posed challenges, touching the lower end of the expected range.
Interim CEO and President John Owen emphasized the company's commitment to enhancing risk management and compliance programs. Despite the decline in profitability, Discover made strategic moves, including the launch of the Cashback Debit product and the announcement of a new CEO, aiming to fortify shareholder value in the future.
Segmental Analysis:
Breaking down its segments, Discover's Digital Banking reported a pretax income of $458 million, reflecting an $848 million decrease from the prior year. Higher provision for credit losses and increased operating expenses offset higher revenue net of interest expense. On the other hand, the Payment Services segment experienced a $17 million increase in pretax income, primarily due to elevated PULSE revenue.
Financial Achievements and Concerns:
The company's achievement in loan growth to $128.4 billion signifies strong consumer demand and an expanding lending portfolio. Revenue growth is a positive indicator of the company's ability to generate income from core business activities. However, the rising net charge-off rate by 198 basis points raises concerns about deteriorating credit quality among borrowers.
Market Response:
Discover Financial Services' stock witnessed a 7.2% decline, trading at $100.90 about 20 minutes before the opening bell after the weak Q4 earnings report. The company fell short of analysts' expectations, and concerns about tougher conditions facing consumers led to a higher bad debt provision.
Looking Ahead:
Despite the challenges, there are potential signs of support for NYSE:DFS shares. Technical analysis suggests a potential area of support just below $100, where the 50-day moving average is poised to cross above the 200-day moving average, forming a bullish golden cross signal.
Conclusion:
Discover Financial Services ( NYSE:DFS ) faced headwinds in Q4 2023, with a notable decline in profitability and increased charge-offs. However, the company's strategic initiatives, robust loan growth, and revenue expansion indicate a commitment to navigating challenges. As Discover charts its course for the future, investors will keenly watch how the company's leadership, risk management measures, and product innovations contribute to its resilience and long-term success in a dynamic financial landscape.
DFS long as earnings gap gets piercedToday NYSE:DFS pierced the bottom of the gap that was created on October 19, when the stock sold off following earnings.
The market's attitude this week has been that "bad is good". GDP forecasts are coming down, retailers are warning about consumers lowering their spending level, NASDAQ:AAPL gave a muted earnings release. All this meant that the Fed left rates untouched at their FOMC meeting this week, and dollar and long rates pulled back pretty hard. I think the narrative that's in the market now, is that things are "not great", but the Fed is finally starting to see it, and so we'll at least be spared further rate hikes.
The point of that narrative is that we may get spared a hard landing, which means no recession, and no wide-spread unemployment. For banks and credit card lenders this means that all the loan loss reserves they built up over the past few quarters may not actually be required to cover future losses. Instead, they may get released, leading to higher future earnings, or at the very least, future quarters will not be depressed by further reserve builds. At the same time, the spend-down of the post-pandemic surplus household savings has brought significant increases in credit card debt, which is enormously profitable for lenders, as long as credit losses stay contained. So, this might be a Goldilocks scenario for stocks like $DFS.
Long story short: I am long a Dec 1 88/92 call spread @1.52. Risking $1.52 for the potential of earning $2.42 is not a tremendous risk/reward. Still, I accept it because I think that the narrative just works for this beaten down name. Why am I capping the trade at $92? Because I am playing the earning gap, and also because above $92 resistance from the VWAP off the YTD High will come into play (declining red line).
💵 E a r n i n g s J o u r n a l📶 S T A T I S T I C A L A N A L Y S I S
Current 50-Day Market Trend: short/sellers/negative.
Next Swing: positive swing to resistance.
Next Wave: buy wave to the ceiling.
Next 50-Day Market Trend: long/buyers/positive.
Trade Type: Touch & Go don't wait for a close.
💵 E A R N I N G S A T A G L A N C E
Release Date: 10/18 AMC
Quarter: FQ3'23
_______________________________________________
Revenue Anticipations: positive surprise of Revenues.
Revenue Surprise-Confidence: on a scale of 0-9, #5
Revenue 2-Year Trend: the company trend in Revenues is positive.
_______________________________________________
EPS Anticipations: positive surprise of EPS.
EPS Surprise-Confidence: on a scale of 0-9, #3
EPS 2-Year Trend: the company trend in EPS is neutral.
_______________________________________________
📝 S Y N O P S I S
🟢BUY: If the earnings report is above the Wall Street consensus, I expect the market will buy the +surprise.
⚪NEUTRAL: If the earnings report is released with complicating press, I expect the market will avoid the surprise and invest in alternative securities.
🔴SELL: If the earnings report is below the Wall Street consensus, I expect the market will sell the -surprise.
🔎 R E S E A R C H D E P T H
Technical Analysis: daily chart.
Fundamental Analysis: EPS & Revenue data.
Press/News: none.
Social Media: none.
Downside Risk in Discover Financial?Discover Financial Services has come under pressure since the summer, and traders may see risk of further downside.
The first pattern on today’s chart is the pair of high-volume bearish gaps. The first occurred on July 20 after earnings missed estimates. The second occurred on August 15 after its CEO unexpectedly left the company. DFS failed to recoup either drop, which may reflect a lack of dip buyers.
Second, the series of lower highs since mid-August could be interpreted as a descending triangle.
Third, the stock has crept below its October 2022 low of $87.64. Remaining under that level could potentially result in more selling.
Finally, the macro environment may be difficult with credit-card losses increasing as the Federal Reserve gets more hawkish. That could be especially important with earnings due in about a month.
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DFS may start consolidatingDFS is now at a strong support level. It has started to consolidate. Consolidation may be from several days to several weeks before DFS has a breakout. In the unlikely case if DFS has a breakdown from the current 88 support level, it will go all the way down to the next support level of 67.
Head & Shoulders and long tradingThe chart should be self-explaining. Let's see if the order gets filled in the next weeks. Good trades, folks!
$DFS with a Bullish outlook following its earnings #Stocks The PEAD projected a Bullish outlook for $DFS after a Negative over reaction following its earnings release placing the stock in drift C with an expected accuracy of 75%.
DFS Discover Financial Services Options Ahead of EarningsLooking at the DFS Discover Financial Services options chain ahead of earnings , I would buy the $104 strike price Puts with
2023-1-20 expiration date for about
$1.60 premium.
If the options turn out to be profitable Before the earnings release, i would sell at least 50%.
Looking forward to read your opinion about it.
$DFS with a Bullish outlook following its earnings #Stocks The PEAD projected a Bullish outlook for $DFS after a Negative over reaction following its earnings release placing the stock in drift C with an expected accuracy of 66.67%.
DFS Inverted H&S -> Right ShoulderBullish Right Shoulder within an Up Channel drawn
Left shoulder and head within grey/white circles
This is the weekly timeframe for DFS
Bearish stock picksThese stocks have a high debt to equity ratio and high volatility.On longer time frames,the bearish bias is crystal clear.
It will be interesting to see their price action once the Feds hike rates on the 27th of next month.
Most of them have negative YTD returns.The harsh macroeconomic environment and inflation haven't done them any favours.
$DFS with a Berish outlook following its earnings #Stocks The PEAD projected a Bearish outlook for $DFS after a Negative Under reaction following its earnings release placing the stock in drift D with an expected accuracy of 66.67%.
