NOTE TO EDITORS: The Following Is an Investment Opinion Being Issued by Bridgewater Equity (BWE).

Simply leaving the plastic at home can slash spending by up to one-third.

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This is the 2nd of two parts highlighting several financial service companies who may have negative credit card exposure from mounting consumer debt and rising unemployment. Capital One Financial (COF) has seen its charge-off rates rise to 6.16% in November, up from 4.51% one year ago. The shares of this credit card issuer have held up [...]

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Discover Financial Services (DFS)

F4Q08 Earnings Call

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Filed under: Earnings reports, General Electric (GE), Schlumberger Limited (SLB), Adobe Systems (ADBE), Best Buy (BBY), FedEx Corp (FDX), Research in Motion (RIMM), Goldman Sachs Group (GS), General Mills (GIS), Morgan Stanley (MS), NIKE, Inc'B' (NKE), Oracle Corp (ORCL), Honeywell Intl (HON), Rite Aid Corp (RAD)

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Adobe Systems Inc. (NASDAQ: ADBE) posted strong Q4 and full-year results, but with flat Q4 revenues.
• Best Buy Inc. (NYSE: BBY) beat Q3 expectations though earnings tumbled, and shares rose about 18%.
• Carnival Corp. (NYSE: CCL) announced that it had lowered its full-year earnings and revenue guidance.
• Discover Financial Services (NYSE: DFS) net income from continuing operations more than doubled in Q4.
• Eaton Corp. (NYSE: ETN) cut its Q4 earnings guidance on weakness in the American auto market.
• FedEx Corp. (NYSE: FDX) Q2 earnings topped expectations and it reaffirmed its guidance.
• General Electric Co. (NYSE: GE) declined to provide quarterly earnings guidance in its annual outlook.
• General Mills (NYSE: GIS) posted a higher-than-expected profit on cost cutting and increased marketing.
• Gilead Sciences Inc. (NASDAQ: GILD) strong earnings growth are expected by one analyst to continue.
• Goldman Sachs Group (NYSE: GS) swung to an anticipated Q4 loss and reported negative revenues.
• Healthcare Realty Trust Inc. (NYSE: HR) was downgraded due to its near-term earnings prospects.
• Honeywell International Inc. (NYSE: HON) affirmed a lower 2009 outlook and said it expects profits to fall.

Continue reading Earnings highlights: Best Buy, FedEx, Goldman Sachs, Nike, RIM, Oracle and others

Earnings highlights: Best Buy, FedEx, Goldman Sachs, Nike, RIM, Oracle and others originally appeared on BloggingStocks on Sat, 20 Dec 2008 09:10:00 EST. Please see our terms for use of feeds.

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Filed under: Earnings reports, American Express (AXP), MasterCard Inc'A' (MA)

I'm not the biggest fan of Discover Financial Services (NYSE: DFS), the credit-card company that competes with MasterCard (NYSE: MA), Visa, Inc. (NYSE: V), and American Express (NYSE: AXP). I currently like Visa the best. Why? I like the brand, I like the fact that it doesn't have direct exposure to loans, and I think there's a lot of upside left to its stock price on a long-term basis (granted, the stock hasn't been strong lately). Nevertheless, I have to wonder if there might be trade potential with Discover's stock.

It's not so much the Q4 earnings. Net income from continuing operations more than doubled to $0.92 per share, something that looks great on the surface. It was helped along, however, by settlement proceeds relating to antitrust complaints against Visa and MasterCard. Not only that, but when you take a look at the consumer-confidence landscape, you'll see that it's pretty dreadful. It doesn't take too much thinking to realize that spending will be down and bad loans most likely will be up going forward. This doesn't benefit Discover. But, according to this article, government help does. Management wants access to some of the monies available in the now-famous federal rescue package. Bank-holding status, if Discover gets it, will do the trick.

This is why I see some trade potential with the stock. It rose the other day on the news, and as I am writing this now, the stock is up another 3%. If one was to play around with Discover, one should only do so temporarily, in my opinion. I think, on a longer-term basis, that either Visa or MasterCard are much better options for investing in the eventual consumer rebound (whenever that decides to happen, of course). Again, all you have to do is remember that Discover has more on the line in terms of charge-offs and loan provisions. Yes, the government can help out Discover's situation, and that will be valuable, but I still wouldn't want the company as a core member of my portfolio.

Disclosure: I don't own any company mentioned; positions can change at any time.

Discover Financial Services: Is it a buy? originally appeared on BloggingStocks on Fri, 19 Dec 2008 16:23:00 EST. Please see our terms for use of feeds.

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FedEx Announces Profit, Cost Cuts; Report: Wal-Mart to Sell iPhones; GM Denies Chrysler Merger Talks; Discovery Applying for Bank Status; Initial Jobless Claims Down; Goldman Sells Sanyo Stake to Panasonic; IMF Sees 2009 U.S. Rebound; Carnival Cruises to 4Q Profit FedEx Corp. (FDX) mixed bad news with good in its latest quarterly ...

US stocks slumped on Thursday on renewed concerns over the fate of automakers. Shares retreated after GE’s debt rating was cut to negative by S&P. Investor’s sentiment was also dampened by a sharp retreat in crude oil prices.[More...]

Credit card company Discover Financial Services (NYSE: DFS) announced on Thursday, that it swung to profit in fourth quarter, thanks to a $863 million payment it received from a legal settlement.[More...]

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