Technical Research on Discover Financial and CapitalSource: Growth in Credit Services in Parallel with the Financial Sector

 Technical Research on Discover Financial and CapitalSource: Growth in Credit
                Services in Parallel with the Financial Sector

PR Newswire

LONDON, February 20, 2013

LONDON, February 20, 2013 /PRNewswire/ --

Technically credit services would fall under the financial sector,which for
long was the darling of portfolio managers as well as retail investors.
However,things changed after the financial crisis,when some of the biggest
players had to be bailed out by the government. Things have,however,improved
considerably after the government's Troubled Asset Relief Program (TARP). The
financial sector typically includes banks,asset management companies,insurance
companies,investment services and brokerage firms along with credit services
companies such as Discover Financial Services (NYSE: DFC) and CapitalSource
Inc (NYSE: CSE).StockCall has posted free technical research reports
onDiscover Financial ServicesandCapitalSource Inc.and these can be accessed
by signing up at

http://www.stockcall.com/analysis

Discover Financial Services in Brief

Discover Financial Services operates a bank holding company and a financial
holding company. Discover operates in two segments - Direct Banking and
Payment Services. Against a market cap of $19.67 billion, the enterprise value
of DFS is $35.44 billion. At $39.53, the stock is trading at 2.14x its book
value of $18.51. This year on January 2, the company launched "It", a zero-fee
card similar to its existing Discover More card but with a more generous
rewards program. Download the free report on Discover Financial Services upon
registration at

http://www.StockCall.com/DPS022013.pdf

CapitalSource Inc. in Brief

CapitalSource is primarily a provider of loans to small- and mid-size
enterprises across U.S. through its subsidiary CapitalSource Bank. The bank
also provides depository services in southern and central California. The
Other Commercial Finance segment handles loan commitment made before
CapitalSource Bank was established and receives payments on its loan
portfolio. CapitalSource Inc. technical report can be accessed for free by
signing up at

http://www.StockCall.com/CSE022013.pdf 

With a market cap of $1.80 billion, CapitalSource is a much smaller company
but like DFS has a higher enterprise value of $2.69. At $8.60, the stock
trades at a low P/B ratio - 1.11x its book value of $7.76. Since December
2010, the company has reduced its outstanding shares by 35% after purchasing 8
million shares in the fourth quarter 2012.

The Sector per Say

The government's TARP program and the government inspired reduction in funding
costs have given a fresh lease of life to the financial sector. Similar
situation is seen in the sector's credit services segment. With employment
solidifying and a net reduction in charge-offs, credit services and credit
card business is reviving and showing good potential for growth.

CapitalSource Bank, for example, showed an annual growth of 19% in loans in
the year gone by. Discover Financial, on the other, is expected to post an EPS
of $4.50 in 2014 as against $0.15 in 2009. In Q3 2012, 100 largest banks in
the country reported a 2.8% drop in card delinquencies more than 30 days
overdue, which is a record of sorts since 1991.

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