Discover Financial Services (NYSE: DFS) slid in pre-market trading at the time of writing on Thursday after the financial services company reported Q2 earnings of $3.54 per share, a decline of 10% year-over-year and below consensus estimates of $3.67 per share.
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The company reported revenues of $3.87 billion, net of interest expense, up by 21% year-over-year but fell short of analysts’ estimates of $3.97 billion. More worryingly, DFS disclosed a Federal Deposit Insurance Corp. probe regarding the incorrect classification of certain credit card accounts into its highest merchant and merchant acquirer pricing tier.
While the company has corrected the mistake even if it was not material to the financial statements, DFS expects a liability of $365 million when it comes to providing refunds to merchants.
DFS declared a quarterly cash dividend of $0.70 per share of common stock payable on September 7 to holders of record at the close of business on August 24, 2023.
Analysts are cautiously optimistic about DFS stock with a Moderate Buy consensus rating based on six Buys and six Holds.
