Discover Financial Stock Hits Fresh All-Time High After Q4 Profit More Than Triples, Retail’s Elated

Its net interest income (NII) rose 5% to $3.63 billion, driven by an expansion in the net interest margin compared to last year.

Discover Financial Services (DFS) stock rose 3.2% to hit an all-time high on Thursday after the company’s quarterly profit more than tripled.

On Wednesday, the company reported a net income of $1.29 billion, or $5.11 per share, for the fourth quarter, compared with $366 million, or $1.45 per share, for the same period last year.

Its net interest income (NII) rose 5% to $3.63 billion, driven by an expansion in the net interest margin compared to last year.

The Riverwoods, Illinois-based company's net interest margin was 11.96%, up 98 basis points compared to last year, benefiting from the sale of its student loan portfolio.

Discover Financial said total loans ended the quarter at $121.1 billion, down 6% year-over-year, but credit card loans rose 1% to $102.8 billion.

The lender’s digital banking pretax income jumped to $1.6 billion for the quarter, reflecting a lower provision for credit losses and increased revenue net of interest expense, partially offset by higher operating expenses.

Discover Financial sold a portfolio of student loans to private equity firms Carlyle and KKR in 2024 for up to $10.8 billion.

The bank’s provision for credit losses declined by 37% to $1.2 billion.

The company said its payment services pretax income rose 37% to $74 million, primarily due to volume growth and the timing of incentives.

Capital One, which had agreed to buy Discover Financial for $35.3 billion last year, also reported an uptick in fourth-quarter earnings on Tuesday.

Retail sentiment on Stocktwits flipped to ‘extremely bullish’ (93/100) territory from ‘bearish’(42/100) a day ago to hit year-high levels, while retail chatter remained ‘extremely high.’

Users also set fresh price targets for the stock.

Over the past year, the stock has more than doubled in value.

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