Discover Financial Services (DFS) continues to surge and is now up almost 100% over the past 6 months, about 5 times the return of its peers.

Company Description

Discover Financial Services is best known for operating the Discover Card. The company also has the Goldfish credit card in the U.K. and runs the pulse ATM/debit network.

Crushed Estimates

Discover shocked analysts by reporting a profit of 52 cents per share on net income of $577 million. The Zacks Consensus Estimate was calling for a loss of 13 cents. Discover received $287 million related to the Visa/MasterCard antitrust settlement.

Chairman and CEO, David Nelms said, “I am very pleased with Discover’s results this quarter, which were characterized by solid revenue growth, better than expected credit performance, continued reduction of expenses and our re-entry into the capital markets,”

Estimates Surge

The Zacks Consensus Estimate for full-year fiscal 2009 is now 7 cents, up from a loss of 99 cents prior to the report. Next year’s projections are averaging 73 cents, up from 21 cents.

In the past 30 days 12 of the 14 analysts providing estimate for this year raised their forecast. Next year saw 15 of 19 analysts raise estimates.

The Chart

Shares of DFS are crushing more popular card companies like Visa and MasterCard over the past 6 months. Take a look at the chart below, showing the performance of all 3 companies.

1255548071.JPGZacks Investment Research