Discover Financial Services (NYSE:DFS) and ZIP (OTCMKTS:ZIZTF) Financial Analysis

Discover Financial Services (NYSE:DFS) and ZIP (OTCMKTS:ZIZTF) are both financial services companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, earnings, institutional ownership, profitability and dividends.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Discover Financial Services and ZIP, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Discover Financial Services	0	12	8	0	2.40
ZIP	0	0	0	0	N/A

Discover Financial Services currently has a consensus target price of $136.12, suggesting a potential downside of 7.12%. Given Discover Financial Services’ higher probable upside, research analysts clearly believe Discover Financial Services is more favorable than ZIP.

Insider and Institutional Ownership

86.9% of Discover Financial Services shares are held by institutional investors. 0.7% of Discover Financial Services shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Discover Financial Services and ZIP”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Discover Financial Services	$17.40 billion	2.11	$2.94 billion	$8.77	16.71
ZIP	N/A	N/A	N/A	N/A	N/A

Discover Financial Services has higher revenue and earnings than ZIP.

Profitability

This table compares Discover Financial Services and ZIP’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Discover Financial Services	12.88%	20.92%	1.94%
ZIP	N/A	N/A	N/A

Summary

Discover Financial Services beats ZIP on 8 of the 8 factors compared between the two stocks.

About Discover Financial Services

Discover Financial Services, through its subsidiaries, provides digital banking products and services, and payment services in the United States. It operates in two segments, Digital Banking and Payment Services. The Digital Banking segment offers Discover-branded credit cards to individuals; personal loans, home loans, and other consumer lending; and direct-to-consumer deposit products comprising savings accounts, certificates of deposit, money market accounts, IRA certificates of deposit, IRA savings accounts and checking accounts, and sweep accounts. The Payment Services segment operates the PULSE to access automated teller machines, debit, and electronic funds transfer network; and Diners Club International, a payments network that issues Diners Club branded charge cards and/or provides card acceptance services, as well as offers payment transaction processing and settlement services. The company was incorporated in 1960 and is based in Riverwoods, Illinois.

About ZIP

Zip Co Limited engages in the provision of digital retail finance and payments solutions to consumers, and small and medium sized merchants (SMEs) in Australia, New Zealand, Canada, and the United States. The company offers Buy Now Pay Later services, which offer line of credit and installment products to consumers through online and in-store. It also provides unsecured loans and lines of credit to SMEs. The company was formerly known as ZipMoney Limited and changed its name to Zip Co Limited in December 2017. Zip Co Limited was incorporated in 2009 and is headquartered in Sydney, Australia.