What Will Drive Discover’s Top Line Going Forward?

-11.67%
Downside
131
Market
116
Trefis
DFS: Discover Financial Services logo
DFS
Discover Financial Services

As we have written previously, over the last five years, growth in Discover’s earnings per share has been inorganic. The company’s expense allocation over the same period has been rather unusual compared to its peers with its expense growth driven by increase in provision for losses on credit card loans and other loans as opposed to increased spending on rebates, incentives and marketing and promotions.

discover growth

Over the last three years, Discover’s revenue growth has been slow. Over the next three year period, we expect growth to be slightly faster with revenue from credit card income driving the company’s top line growth over this period. We expect close to 56% of the company’s revenue growth over this period to come from increase in credit card income.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Discover
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