Published September 27, 2012
Powered by double-digit revenue growth, card giant Discover Financial (DFS) easily beat the Street on Thursday with a 3% dip in third-quarter profits.
Shares of the payment services company rallied more than 3% in premarket action on the stronger-than-expected top- and bottom-line results.
Discover said it earned $627 million, or $1.21 a share, last quarter, compared with a profit of $649 million, or $1.18 a share, a year earlier. Analysts had been calling for EPS of just $1.03.
Revenue climbed 10% to $2 billion, besting the Street’s view of $1.90 billion.
Total loans jumped 9% to $59.2 billion, while credit-card loans gained 4% to $48.1 billion. Card sales volume rose 4%.
In a sign of improving health of U.S. consumers, Discover said the delinquency rate for loans over 30 days past due and net charge-offs reached at historic lows of 1.81% and 2.43%, respectively.
“Card sales and receivables grew in a challenging environment while credit quality continued to improve,” Discover CEO David Nelms said in a statement.
Wall Street cheered Discover’s earnings beat, bidding the company’s shares up 3.30% to $38.24 ahead of the opening bell. The gains should allow Discover to tack onto its 2012 rally of 54%.