Shares of Discover Financial Services fell more than 7% in premarket trading on Thursday after the forecast worsened. Credit card spending for credit card transactions exceeded Wall Street expectations.
While Discover Financial’s
DFS,
Fourth-quarter earnings of $3.77 per share fell behind analysts’ estimates of $3.65 per share, the company’s debt outlook will remain unchanged. Debt but not collection, it has fueled the tension in sharing.
“Despite the decline in earnings, we expect the stock to trade lower on net-charge-off (NCO) guidance to beat expectations,” analysts said. JPMorgan on Thursday.
Discover said it expects the full-year average interest rate to be between $3.5% and 3.9%, above JPMorgan’s estimate of 3%.
Debt settlement is defined as the amount of dollars that represents the difference between expenses and any recovery of bad debt, according to Investopedia. The expense ratio reflects the debt owed to a company that is not expected to be recovered.
Discover Financial said that its fourth-quarter fixed income ratio increased by 0.76% – to 2.13% – in a move that reflects the “ordering of debt on the portfolio.”
The company said it set aside $883 million for bad debts in the quarter, up $620 million from the same quarter last year.
The total wage rate nearly doubled in the fourth quarter to 2.13% from 1.37% in the year-ago quarter.
Fourth quarter earnings rose to $1.03 billion, or $3.77 per share, from $1.07 billion, or $3.64 per share, in the same quarter last year.
Revenue rose 27% to $3.73 billion from $2.94 billion.
Discover ended the quarter with $112.1 billion in loans, up 20% from the same quarter in 2021.
The Management also stated that the Board of Directors has announced the semi-annual cash distribution, as well as the quarterly cash distribution of 60 cents per share.
MarketWatch reporter Bill Peters contributed to this report.