Share count
251Mpeak FY2022
← All companies ← DFIN Manual DG → ← CACC Consumer Finance ECPG →
DFS, Discover Financial Services
Consumer Finance financial
A balance-sheet business, read on book value, net interest margin and credit losses rather than an earnings multiple.
The business
What it sells, where the money comes from, the kind of company it is.
Revenue · FY2024
$17.9B
+13.4% YoY
Vital signs · TTM, with 3-yr average
Revenue $18.0B 3-yr avg $15.6B
Revenue $489M +3.4% vs yr-ago qtr
Net income $1.1B yr-ago $813M
Net margin 218.6% yr-ago 171.9%
The business in brief
What this business is and what moves its needle, from its own SEC filings.
- What moves the needle
- Net interest margin, loan losses, and book value. A lender is read on the quality of its balance sheet, not an earnings multiple, and the worst year of credit losses matters more than the best.
- Is it a good business?
- Return on equity has run high across the record (median 25%, above 12% in 3 of 3 years). It runs at a 39% efficiency ratio, lean. A bank that earns above its cost of equity through the cycle compounds book value; whether this one did it by underwriting discipline or by reaching for risk is what the 10-K, and the worst years in the record, will tell you.
Every line is arithmetic on the company's filings, shown in full in the sections below.
The record
Ten years of arithmetic, read across the cycle.
The record, 2022–2024
realized figures from each filing · older years to the left| 2022’22 | 2023’23 | 2024’24 | TTMTTMMar 2025 | |
|---|---|---|---|---|
| Income statement | ||||
| $13.2B | $15.8B | $17.9B | $18.0B | RevenueRevenue |
| $11.0B | $13.1B | $14.3B | $14.4B | Net interest incomeNet int. |
| $2.2B | $2.7B | $3.6B | $3.6B | Noninterest incomeFee inc. |
| $2.4B | $6.0B | $4.9B | $4.7B | Credit-loss provisionProvision |
| $4.3B | $2.8B | $4.5B | $4.8B | Net incomeNet inc. |
| 23% | 23% | 25% | 25% | Effective tax rateTax rate |
| Cash flow & returns | ||||
| 3.3% | 1.8% | 3.1% | 3.2% | Return on assetsROA |
| 31% | 20% | 25% | 25% | Return on equityROE |
| 32% | 20% | 26% | 26% | Return on tangible equityROTCE |
| 39% | 39% | 39% | 39% | Efficiency ratioEffic. |
| Balance sheet | ||||
| $131.9B | $151.7B | $147.6B | $147.9B | Total assetsAssets |
| $91.6B | $108.9B | $107.0B | $108.2B | DepositsDeposits |
| $255M | $255M | $255M | $255M | GoodwillGoodwill |
| $13.9B | $14.2B | $17.9B | $19.0B | Shareholders’ equityEquity |
| Per share | ||||
| 278M | 254M | 251M | 252M | Shares out (diluted)Shares |
| $15.53 | $11.01 | $18.07 | $19.00 | EPS (diluted)EPS |
| $49.98 | $56.04 | $71.42 | $75.25 | Book value / shareBVPS |
| $49.06 | $55.04 | $70.40 | $74.24 | Tangible book / shareTBVPS |
The record, charted
FY2022–2024Each measure over its full record; the current point and the worst year marked.
Revenue
$17.9Blow FY2022
Quality & stewardship
Returns, the balance sheet, capital allocation, and pay.
Owner’s Scorecard
FY2024 10-K · source on SEC EDGAR →
Is it a good business?
- Return on equity 25%Very high (≥17%)Net income $4.5B ÷ equity $17.9BIndustry peers: median 23%
What this means
The bank's north star, what it earns on shareholders' capital. Cost of equity is roughly 10%, so a return durably above that builds value and below it destroys it. One year is noisy; the durability across a full credit cycle is what counts.
- Very high (≥18%)Net income ÷ (equity − goodwill $255M − intangibles $0)Industry peers: median 31%
What this means
The cleaner return, stripping out the goodwill paid for past acquisitions. This is the number a buyer of the whole bank actually earns on the hard capital.
- Efficiency ratio 39%Low cost ratio (<58%)Noninterest expense $6.9B ÷ (net interest income + fees)Industry peers: median 47%
What this means
The share of revenue eaten by running costs; lower is better, and below about 60% marks a genuinely efficient operation. A low ratio held for years is the operational side of a moat.
Is it sound?
- Capital (equity / assets) 12.1%Well capitalizedEquity $17.9B ÷ assets $147.6B
What this means
A plain-English leverage read: how much of the balance sheet is the owners' own money. This is a rough proxy; the regulatory figure is the CET1 ratio, which is risk-weighted and reported in the filing. The point is the same, how much loss the bank can absorb before depositors are at risk.
- Deposit funding 72%Deposit-fundedDeposits $107.0B ÷ assets $147.6B
What this means
Low-cost, sticky deposits are a bank's real moat, the cheap raw material it lends out at a spread. A bank funded mostly by deposits earns more durably than one that rents its money in the wholesale market.
- Credit cost (provision / NII) 34%ElevatedProvision for credit losses $4.9B ÷ net interest income $14.3B
What this means
What the bank set aside this year against loans going bad, as a share of its lending income. This swings hard with the cycle, low in good years and spiking in recessions, so read it across the record, not in one year. Disciplined underwriting shows up as low, stable provisions through a downturn.
Does AI threaten the moat?
Low contestabilityThe moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.
AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat.
Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.
All figures as filed; the source filing is linked above.
Management, ownership & pay
read the proxy →From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.
| Fiscal year | Chief executive | Pay, as filed | “Actually paid” | Owner earnings |
|---|---|---|---|---|
| 2020 | Mr. Hochschild | $10.4M | $2.8M | — |
| 2021 | Mr. Hochschild | $12.1M | $32.4M | — |
| 2022 | Mr. Hochschild | $10.6M | $8.3M | $7.1B |
| 2023 | Mr. Hochschild | $10.9M | $3.2M | $8.5B |
| 2023 | Mr. Owen | $2.2M | $2.3M | $8.5B |
Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.
- Stock-based compensation$60M
The slice of the business handed to employees in shares this year, 2% of revenue, equal to 1% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Peers, Consumer Finance
The same industry, side by side on the bank lens. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.
| Company | Revenue | ROE | ROTCE | Efficiency | NII / assets |
|---|---|---|---|---|---|
| AXPAmerican Express Company | $72.2B | 30% | 35% | 73% | 4.3% |
| DFSDiscover Financial Services | $17.9B | 25% | 26% | 39% | 8.6% |
| BKKTBakkt Inc. | $2.3B | -146% | -252% | — | 0.5% |
| ATLCAtlanticus Holdings Corporation | $2.0B | 42% | 42% | 55% | 21.3% |
| SOFISoFi Technologies | $3.6B | -6% | -9% | 85% | 3.6% |
| OMFOneMain Holdings Inc. | $4.9B | 23% | 48% | 39% | 15.3% |
| SYFSynchrony Financial | $19.0B | 21% | 25% | 27% | 15.5% |
| SLMSLM Corporation | $2.0B | 30% | 31% | 33% | 5.0% |
| Group median | — | 24% | 28% | 39% | 6.8% |
The price
What a price has to assume.
What the price implies
price / tangible bookA bank is worth a multiple of its tangible book value, and the multiple it deserves is set by the return it earns on that book. Type today’s price; we show what you would be paying against what Discover Financial Services’s record justifies.
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The assumptions
The justified multiple is (return on tangible equity − growth) ÷ (cost of equity − growth). A bank earning exactly its cost of equity is worth about one times tangible book; the premium above that prices each point of durable excess return. A higher cost of equity lowers the justified multiple for a bank.
Enter a price above to run it.
Price / tangible book—
Justified by the return—
Normalized return on tangible equity26%
Price / book—
Earnings yield—
P/E (3-yr avg ’22–’24)—
Graham’s price gate—
Graham applied the same standards to financial enterprises (Intelligent Investor ch.14): the 15× multiple cap on averaged earnings, and P/E times price-to-book at most 22.5. The gate marks the bargain-hunter’s floor, not a verdict.
A dated snapshot of the price you typed, the assumptions you set, and what the page showed for them. A snapshot is never edited after it is saved. Your notebook is yours alone — the commitment states what is stored and what we will never do.
Tangible book $18.7B on 252M shares, a 26% normalized return on it. The dials set the multiple such a return would justify; your price sets the multiple you are paying. It assumes the bank keeps earning that return; a credit cycle, a rate shock or a bad acquisition changes it, which is what the record and the 10-K are for.
Cite: Owner Scorecard, "Discover Financial Services (DFS), the owner's record," https://ownerscorecard.com/c/DFS, data as of 2026-07-09.
Manual order: ← DFIN its page in the Manual DG →
Industry order: ← CACC the Consumer Finance chapter ECPG →