Is Discover Financial Services a Buy?
The financial services industry has been hit hard by the COVID-19 pandemic, but like any other industry, the situation may actually present some level of investing opportunity, depending on the companies being considered. Discover Financial Services (NYSE: DFS), best known for its credit cards, is the smallest (by revenue) of the four major credit card networks -- Visa (NYSE: V), MasterCard (NYSE: MA), and American Express (NYSE: AXP) are the others.
That smaller size didn't keep Discover's share price from plunging along with the others at the start of the pandemic. Like much of the financial industry, shares remain dramatically lower, losing roughly 33% of its value year to date, but are up from their worst lows in late March. Is now the right time to invest in the company, or is that a signal to stay away?
Discover is similar to American Express in that they both issue credit cards to customers as well as provide the networks that facilitate the cards' transactions. This is different from Visa and Mastercard, which both operate transaction networks but work with banks that actually issue the credit cards. You can use a multitude of different types of cards issued by financial entities like Citibank or JPMorgan Chase wherever Visa and Mastercard are accepted. Discover cards, in contrast, are issued through its own bank and can be used only on the Discover network.
Source Fool.com
