Riverwoods, Illinois-based Discover Financial Services (DFS) is a top financial services company specializing in direct banking and payment services. With a market cap of $42.5 billion, it plays a key role in the financial sector, offering a wide range of products, including credit cards, personal loans, and student loans. 

Companies valued at $10 billion or more are typically classified as “large-cap” stocks and Discover Financial rightly fits into the credit services category. 

DFS shares are trading 8% below their 52-week high of $188.26, which they hit on Nov. 6. Also, the stock has gained 21.5% over the past three months, outpacing the Financials Select Sector SPDR Fund’s (XLF) 6.2% rise over the same time frame. 

In the longer term, DFS is up 54.1% on a YTD basis, and the shares have gained 60.9% over the past 52 weeks. The XLF has gained 29% in 2024 and 31.5% over the past year.

To confirm its bullish trend, DFS has been trading below its 50-day moving average since early November but above the 200-day moving average since late October.

On Oct. 16, DFS announced its Q3 earnings, and its stock rose nearly 2% in the following trading session. Its EPS of $3.69 surpassed Wall Street’s expectations. Also, the adjusted revenue of $4.5 billion beat the market’s consensus, leading to a rally in price.

Highlighting the contrast in performance, rival American Express Company (AXP) has outperformed DFS slightly, with a 65.3% gain over the 52 weeks.

Given DFS' recent outperformance compared to the financial sector, analysts are moderately optimistic about its prospects. The stock has a consensus rating of "Moderate Buy" from 14 analysts in coverage. The mean price target is $174.54, which suggests a marginal premium to its current levels.