Summary
Discover Financial Services is fundamentally different than most banks because it has less direct exposure to interest rate changes.
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DFS faces increasing delinquency rates and loan losses in its credit card, student loan, and personal loan segments.
Household financial stability is poor today, with real median family income continuing to fall, forcing declines to discretionary spending.
The company’s financial position is worse than usual, with lower solvency and liquidity levels than typical over the past two decades.
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Discover’s overall risk is not as significant as many banks, but the stock could be overvalued due to its considerable book value premium and negative EPS outlook.
