Should I buy Discover Financial Services stock in 2025?

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At HelloSafe, our expert has been monitoring the performance of Discover Financial Services for over three years. Every month, well over a million users in the United States rely on us to interpret market trends and pinpoint the best investment opportunities. Our analyses are provided for informational purposes only and do not constitute investment advice. In line with our ethical charter, we have never been, and will never be, compensated by Discover Financial Services.

What is Discover Financial Services?

How much is Discover Financial Services stock?

The price of Discover Financial Services stock is rising this week. As of now, DFS is trading at $190.31, up $7.76 (4.25%) over the past 24 hours and showing a 2.95% gain for the week. The company maintains a market capitalization of $47.89 billion with an average three-month trading volume of 2.33 million shares.

Valuation remains attractive, with a P/E ratio of 10.16 and a dividend yield of 1.47%, while its stock beta stands at 1.19, signaling moderately higher volatility than the broader market.

With the Capital One merger approaching and strong recent financial results, investors may find renewed potential and heightened activity ahead.

Our full analysis on Discover Financial Services stock

After a comprehensive review of Discover Financial Services’ latest financial results and a close examination of its stock performance over the past three years, our proprietary algorithms—combining rigorous financial indicators, technical momentum, and nuanced sector-level intelligence—highlight DFS as a stock deserving renewed attention. With multi-source analysis spanning earnings surprises, valuation frameworks, and competitive benchmarking, we find a landscape shaped by robust fundamentals and an evolving strategic outlook. So, why might Discover Financial Services stock once again become a strategic entry point into the financial services and digital banking sector in 2025?

Recent Performance and Market Context

Discover Financial Services (NYSE: DFS) is trading at $190.31 as of early May 2025, reflecting a compelling year-over-year climb of approximately 53%. Notably, DFS has delivered a 25.8% gain over the past six months and surged over 4% in the past trading week alone—a testament to both macro and micro drivers igniting investor confidence.

Several key tailwinds have played into this outperformance:

• Regulatory Approval of Capital One Merger: The green light for the merger not only validates DFS’s strategic roadmap but has also catalyzed upgrades in analyst price targets, enhancing market perception.
• Q1 2025 Earnings Beat: DFS reported $1.1 billion in net income (+30% YoY) and a 31% jump in diluted EPS ($4.25), powered by resilience in net interest margins and digital banking profitability.
• Favorable Sector and Macro Backdrop: With U.S. consumer spending remaining robust and quantitative tightening cycles stabilizing, credit services peers—especially those with digital advantages—are seeing tailwinds. DFS, in particular, appears structurally well-positioned to benefit from these macroeconomic currents.

Together, these drivers set an encouraging tone, framing DFS’s current price trajectory and sentiment as anchored in enduring financial strength and expanding sector leadership.

Technical Analysis

A thorough review of DFS’s technical landscape yields strikingly positive signals, underscoring accumulating strength in both the short and medium term:

Key Indicators:

• Moving Averages: The stock is trading handsomely above its 20-day ($167.69), 50-day ($170.91), 100-day ($177.91), and 200-day ($161.59) moving averages—an unequivocal indicator of bullish momentum.
• Relative Strength Index (RSI): At 58.76, RSI sits in the higher end of the neutral range, indicating that there is ample space for further upside before overbought conditions become dominant.
• MACD: While recently showing minor bearish divergence, the overall structure remains supportive of a bullish continuation given prevailing moving averages and price action.
• Stochastic Oscillator: At 87.04%, stochastic readings suggest slight overextension, but sustained volume and bullish breakouts often justify such levels in trending markets.
• Support and Resistance: The $178.75-$174.82 region offers robust support, while upside resistance levels at $184.83 and $190.91 are already being actively challenged—potentially presaging a decisive breakout.

Technical Sentiment:

• The technical consensus leans bullish, with 13 bullish vs. only 5 bearish technical indicators currently flagged.
• Price staying above major moving averages continuously over the past 60 trading days is a strong indicator institutions are accumulating shares, not distributing them.
• Recent price acceleration, in conjunction with the bullish price pattern, substantiates DFS’s technical credentials—as the stock appears to be entering a new bullish phase.

Fundamental Analysis

The fundamental case for DFS appears even more convincing when parsing through recent financials, valuation metrics, and competitive positioning:

Growth and Profitability:

• Revenue and Earnings: DFS posted $4.25 billion in Q1 2025 revenue (+2% YoY), but most importantly, net income rocketed to $1.1 billion (+30% YoY), and diluted EPS rose by 31%. These are best-in-class figures within the credit services cohort.
• Net Interest Margin (NIM): At 12.18%, NIM expanded by 115 bps year-over-year, reflecting continued pricing power and efficient risk management.
• Digital Banking Strength: Pretax income from digital banking soared, cementing DFS’s status as a digital leader among legacy credit issuers.

Attractive Valuation:

• P/E Ratio: DFS currently trades at 10.16x trailing earnings—a compelling discount to the sector average, especially given its robust EPS growth and improving return profile.
• Forward P/E and PEG: At 12.97 forward P/E and a PEG ratio below the industry median, valuation not only appears justified but arguably undervalues merger synergies and digital expansion potential.
• Peer Comparison: Most large-cap credit service firms (including pure-play fintechs) trade at notably richer multiples, often on weaker profitability or slower growth trajectories.

Structural Strengths:

• Brand and Market Share: Discover is one of the four largest U.S. credit card networks, supported by durable brand equity and customer loyalty.
• Innovation: Focused investment in digital transformation and user experience continues to widen DFS’s competitive moat.
• Merger Synergy: The Capital One deal sets the foundation for extensive cost/risk rationalization and revenue cross-selling in an increasingly consolidated landscape.

Volume and Liquidity

Trading volume in DFS remains robust and well above sector averages, with an average daily volume of 2.33 million shares. This indicates:

• Strong Market Confidence: High volume, matched with extended price appreciation, signals genuine buying interest fueled by both retail and institutional investors.
• Favorable Free Float: With a mid-cap market cap of nearly $48 billion and an accessible free float, DFS allows for efficient entry and exits—supporting dynamic valuation and liquidity for all classes of investors.
• Volatility Profile: With a beta of 1.19, DFS offers an attractive balance—exhibiting both upside potential and moderately contained volatility, appealing to bullish investors seeking alpha in the credit sector.

Catalysts and Positive Outlook

Looking ahead, multiple bullish catalysts could propel DFS further into the spotlight:

• Capital One Merger Completion: Slated for mid-May 2025, the union is expected to generate outsized cost savings, higher revenue per user, and market share advances, instantly forming the sixth-largest U.S. bank.
• Ongoing Digital Banking Investment: DFS’s continued GMV gains in digital, highlighted by strong YoY volume surges in both PULSE (+3%) and Diners Club (+18%), position it for sustained fintech relevance.
• Favorable Credit Trends: Credit card net charge-off rates are improving (down 19 bps YoY), indicating better underwriting and economic resilience.
• Dividend Growth Policy: A consistent dividend (currently yielding 1.47%) may see an uptick or further upside upon merger integration, especially as returns on capital solidify.
• Sector Momentum: With regulatory clarity and sector rotation benefiting digital banks, DFS’s scale, technology investment, and new structure could attract fresh institutional inflows.
• ESG Initiatives: Increasing focus on digital financial inclusion and customer-centric innovation could unlock further brand and valuation premiums as ESG attention intensifies in North American financials.

Investment Strategies

For investors evaluating entry points, DFS sets up favorably across investment horizons:

• Short-Term: Technical momentum above major averages and near-term bullish price action, especially as DFS challenges key resistance, supports tactical trades (noting possible volatility around the merger close).
• Medium-Term: The post-merger integration period—with expected synergy updates and earnings outperformance—may provide a continued tailwind as strategic benefits materialize.
• Long-Term: The combined entity’s scale, digital prowess, and profitability indicate a multi-year opportunity, particularly as market share consolidates and DFS’s legacy business is rejuvenated.
• Positioning: The current price, just off recent highs but before full merger synergies are priced in, seems to represent an ideal setup for those seeking a compelling risk-reward dynamic in sector leaders.

Is it the Right Time to Buy Discover Financial Services?

In weighing the data, DFS offers a particularly attractive opportunity at this juncture: robust earnings, a discount valuation, transformative deal synergy, and clear technical momentum all converge to justify renewed interest. While the path post-merger warrants monitoring—especially for integration progress and evolving credit cycle—DFS’s outlook in 2025 and beyond is supported by a rare blend of strategic catalysts and structural resilience.

For investors seeking exposure to the intersection of financial services and fintech innovation—with an added catalytic boost from merger activity—Discover appears poised for continued market leadership, growth, and value creation. With its fundamentals, technical posture, and unfolding strategic narrative, Discover Financial Services stock may be entering a new bullish phase that deserves close consideration for those seeking to benefit from sector transformation and upward momentum.

Ultimately, as the Capital One merger nears completion and sector dynamics continue to favor digital disruptors with scale, DFS stands out as a stock whose upside potential increasingly merits the spotlight in any diversified financial portfolio.

How to buy Discover Financial Services stock in United States?

Buying Discover Financial Services (DFS) stock online is both simple and secure, provided you use a regulated U.S. broker. Most platforms offer two straightforward methods: direct spot buying (purchasing actual shares) and trading via Contracts for Difference (CFDs), which allow for leveraged exposure to price movements without owning the stock. Both methods can be executed fully online in just a few steps, with your account and transactions protected by modern financial regulations. Below, we outline each approach, and further down the page you’ll find a detailed broker comparison to help you choose the best platform for your needs.

Cash Buying

Spot buying means you purchase real Discover Financial Services shares and become a direct shareholder. This gives you ownership rights, such as dividend payments and voting at annual meetings. U.S. brokers usually charge a fixed commission per order, ranging from $0 (with some low-cost brokers) to about $5 per trade.

Important Example

Example: Suppose the DFS share price is $190.31. With a $1,000 investment, you can buy approximately 5 shares ($1,000 ÷ $190.31 ≈ 5.25), accounting for a typical $5 commission. After fees, you’d own 5 shares for roughly $951.55 invested in stock and $5 in fees.

✔️ Gain scenario: If the share price rises by 10% to $209.34, your 5 shares are worth about $1,046.70 ($209.34 × 5).
Result: That’s a $95.15 gross gain, or +10% on your initial investment, not including taxes or fees.

Trading via CFD

CFD (Contract for Difference) trading on DFS shares lets you speculate on price changes without actually owning the shares. CFDs are leveraged products: you can open larger positions with smaller deposits, but this amplifies both gains and risks. Fees typically include a spread (the difference between the buy and sell price) and overnight financing charges if held beyond a day.

Important Example

Example: If you deposit $1,000 and use 5x leverage, you control a $5,000 position in DFS. If the stock price rises by 8%, the value of your position increases by 8% of $5,000 ($400).

✔️ Gain scenario: An 8% gain on a $5,000 position equates to $400 profit, or +40% on your $1,000 stake (excluding fees and interest).

Final Advice

Before buying Discover Financial Services shares, carefully compare broker fees, available features, and trading conditions. Whether you opt for owning shares outright or trading via CFDs depends on your financial goals, risk tolerance, and investment horizon. To make the most informed decision, be sure to check the detailed broker comparison available further down this page.

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Our 7 tips for buying Discover Financial Services stock

The latest news about Discover Financial Services

Discover Financial Services stock surged over 4% following the announcement that regulatory approvals for its merger with Capital One were finalized. This landmark development, confirmed on April 18, 2025, paves the way for Discover to officially combine with Capital One around May 18, 2025, making the merged entity the sixth-largest U.S. bank by assets. The market reacted positively to this news, with the stock climbing to $190.31, marking a 52% year-on-year gain and nearly a 3% increase over the last week. Analysts from leading research firms responded by raising their price targets for DFS, citing anticipated revenue and cost synergies, stronger product offerings, and enhanced national presence stemming from the merger.

Discover's Q1 2025 earnings release exhibited robust operating performance with net income up 30% and diluted EPS up 31% year-over-year. The company reported net income of $1.1 billion and diluted earnings per share of $4.25 on revenues of $4.25 billion, reflecting solid momentum in core lending and digital banking segments. Notably, Discover’s net interest margin expanded by over 1 percentage point to 12.18%, underscoring successful portfolio management amid evolving interest rate dynamics. The digital banking division, in particular, produced a remarkable $1.4 billion in pretax income, reinforcing Discover’s competitive positioning in the U.S. online finance market and supporting a positive earnings outlook during this pivotal period.

Technical indicators remain broadly bullish for DFS; the share price sits well above its 20-, 50-, 100-, and 200-day moving averages. This trading pattern signals continued strength and bullish investor sentiment. While the MACD points to some short-term caution with a mild bearish divergence and the stochastic oscillator suggests the stock is overbought, the relative strength index is still neutral, indicating further upside is possible without an immediate threat of a correction. The market’s technical consensus presently counts 13 bullish and just 5 bearish indicators for DFS, and institutional buying volume suggests strong confidence ahead of the merger closure.

Discover declared a regular quarterly dividend of $0.70 per share, payable in early June to shareholders as of late May. This dividend, representing a yield of approximately 1.47%, continues Discover’s shareholder-friendly capital returns and provides reliability for U.S. investors. The company announced that following the expected merger closing, dividend payments may transition to those of Capital One, hinting at an expanded and potentially more diversified dividend policy for future holders. The consistency and clarity in dividend announcements have been viewed positively by analysts, providing stability and transparency during a period of significant corporate transformation.

Analyst sentiment has shifted moderately more positive, with recent upgrades and an average price target reflecting potential further upside. The latest consensus includes 7 Buy and 10 Hold recommendations, with the average analyst price target rising to $198.39, about 4.2% above the current trading level. This improvement follows upbeat Q1 results and confirmation of the merger timetable, as analysts cite the potential for continued earnings growth, solid credit performance, and the opportunities presented by a larger, more diverse customer base post-merger. The relatively low forward P/E ratio and strong fundamentals further reinforce the constructive outlook for Discover among U.S. market professionals.

FAQ

P. Laurore

Finance expert

Co-founder of HelloSafe and holder of a Master's degree in finance, Pauline has recognised expertise in personal finance, which she uses to help users better understand and optimise their financial choices. At HelloSafe, Pauline plays a key role in designing clear, educational content on savings, investments and personal finance. Passionate about financial education, Pauline strives, with every piece of content she oversees, to provide reliable, transparent and unbiased information for independent and informed financial management. To this end, she has tested over 100 trading platforms to help internet users make the right choices.