What happened
Shares of Discover Financial Services (DFS 0.43%) climbed nearly 15% last month, according to data provided by S&P Global Market Intelligence, following the company's first-quarter results.
So what
Discover's adjusted revenue rose 7% year over year, to $2.76 billion. That was slightly above Wall Street's estimates for adjusted revenue of $2.75 billion. Discover's earnings per share, meanwhile, jumped 18%, to $2.15. That, too, bested analysts' expectations, which had been for earnings per share (EPS) of $2.00.
Discover grew its loan portfolio by 7%, to $88.7 billion. The company also continues to demonstrate an ability to generate strong returns while controlling risk. The credit card giant's first-quarter return on equity and total net charge-off rate checked in at 26% and 3.25%, respectively.
"Once again, this quarter showed the power of the Discover business model to deliver outstanding shareholder returns," CEO Roger Hochschild said in a press release. "Our solid execution on growth initiatives, effective credit risk management, and operating efficiency drove strong profitability."
Discover Financial Services has done an admirable job of balancing risk and reward. Image source: Getty Images.
Now what
Discover's stock is now up 35% so far in 2019. But with shares still trading for less than 10 times earnings, my colleague Matthew Cochrane believes this credit card titan remains a compelling buy.
