Credit Card Weekly Notes: Discover, MasterCard

-11.69%
Downside
131
Market
116
Trefis
DFS: Discover Financial Services logo
DFS
Discover Financial Services

During the past week, Discover Financial Services (NYSE:DFS) released monthly data on its delinquency and charge-off rates, while MasterCard (NYSE:MA) upped its marketing push with the expansion of its exclusive Priceless Cities platform.

Below we review the week ended October 10, 2014 for the two credit card companies.

Discover Financial Services

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Discover released data on delinquency rates and credit card charge-off rates for the month of September. The company reported loans worth $53.7 billion ending September 30, 2014, and its delinquency rate over the month was unchanged at 1.7% compared to the previous month. It has remained relatively steady over the past twelve months. [1] The delinquency rate is the percentage of total loans that are past their due dates. Discover’s net principal charge-off rate (the percentage of loans considered unredeemable) was 2.2.% for the month of September, ranging between 1.9-2.5% over the past twelve months.

Discover’s stock was down by over 3% last week, largely due to movement in the overall market. We have a price estimate of $64 for the company’s stock, translating into a valuation of nearly $30 billion, which is about in line with the current market price.

See our complete analysis of Discover Financial here

MasterCard

MasterCard announced the expansion of its Priceless Cities platform to 36 cities by the end of 2014. Priceless Cities is a part of MasterCard’s Priceless marketing platform that allows cardholders to enjoy special rewards and offers across services such as dining, travel, shopping and entertainment. According to the company, ever since the program was launched in New York in 2011, more than 2 million cardholders have benefited from exclusive offers. [2]

During the week, MasterCard’s stock tumbled by around 5%. We have a price estimate of $85 for the company’s stock, translating into a valuation of approximately $95 billion. We estimate an EPS of $3 for the current year, which is similar to the consensus EPS for the company.

See our full analysis of MasterCard here

Notes:
  1. Sec 8-K Filing []
  2. MasterCard Priceless Cities Grows to 36 by Year’s End, MasterCard Press Release []