The past few days have been very eventful for Discover Financial Services (NYSE: DFS). The company, best known as the entity behind the underdog Discover credit card, is now approved to be acquired by a peer. It also reported encouraging quarterly financials.
With these strong winds at its back, according to data compiled by S&P Global Market Intelligence, Discover stock was up by more than 13% week to date as of very early Friday morning.
A busy couple of days for Discover
Discover charged into the week on a high note, after the last two federal regulators scrutinizing the company's purchase by Capital One Financial signed off on the deal last Friday. A mere three business days later, Discover published what should be its last quarterly earnings release before being absorbed into Capital One.
Discover's first quarter of 2025 was headed by a total net revenue figure of $4.25 billion, which was 2% higher on a year-over-year basis. The financial services company did much better on the bottom line, with a 30% leap in generally accepted accounting principles (GAAP) net income to slightly over $1.1 billion. This shook out to $4.25 per share.
Both headline numbers beat the consensus analyst estimates, the bottom-line one overwhelmingly so. On average, the pundits tracking Discover were modeling $4.23 billion for net revenue and $3.35 per share for GAAP net income.
In the earnings release, interim CEO Michael Shepherd said this performance "benefited from a strong net interest margin and positive credit trends."
A lot to swallow
While that bottom-line boost was admirable, from now until the Capital One deal closes -- May 18 is the apparent date -- investors shouldn't expect much movement in Discover shares. The buyout story, after all, is basically over. The main development to keep an eye on now is how Capital One successfully (or not) integrates its asset-to-be into its own operations.
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Discover Financial Services is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.
