NEW YORK (AP) — Credit card issuer Discover Financial Services, which also owns Diners Club and its own network for processing debit and credit card payments, reports its fiscal second-quarter results before the stock market opens on Thursday.
WHAT TO WATCH FOR: Lower default rates should help boost earnings.
Discover, like other top credit card issuers, has seen a sharp decline in customer late payments and defaults so far this year, after a two-year spike. That trend is expected to continue, which means the company will write off lower amounts as uncollectible, and set aside less money to cover future defaults. Wall Street will watch for how much the company releases from its reserves to cover bad debt. A big release could boost the quarter's results.
Also in the spotlight will be data on card use and growth in its other lending businesses, like student loans.
The company, based in Riverwoods, Ill., last week announced plans to buy back up to $1 billion of its common stock over the next two years.
WHY IT MATTERS: Discover is one of the biggest credit card companies in the nation, and use of its cards provides a peek at consumer behavior and sentiment. Data on late payments and defaults help provide insight into how much difficulty consumers are having in keeping up with their bills.
WHAT'S EXPECTED: Analysts, on average, expect Discover to report profit of 75 cents per share on revenue of $1.67 billion.
LAST YEAR'S QUARTER: Last year, Discover earned $184.6 million, or 33 cents per share, on revenue of $1.66 billion.
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