Discover Financial Posts $104 Million Q1 Loss; Will Repay TARP (DFS)

in Debt Gold Gold Investing by admin — March 17, 2010 5:56 am | no comments

Credit card issuer Discover Financial Services ( DFS ) said late Tuesday that it saw a first quarter loss, hurt by one-time charges, and intimated it would soon pay back its federal TARP bailout loan. The Riverwoods, Illinois-based company reported a first quarter net loss of $104 million, or 22 cents per share, compared with a profit of $120.4 million, or 25 cents per share, in the year-ago period. Excluding one-time items, the company saw an adjusted profit of 11 cents per share. On average, Wall Street analysts expected a slightly higher adjusted profit of 12 cents per share. Discover said it bolstered its loan loss provisions by $305 million in the first quarter. It also said it had received regulators’ approval to repay the $1.2 billion in federal debt it received as part of the government’s TARP bailout program last year. In order to help repay the debt, the company will take on an additional $350 million in new debt during the second quarter. Discover Financial shares fell 23 cents, or -1.5%, in premarket trading Wednesday. The Bottom Line We have avoided shares of DFS since our early June coverage began last year, when the stock was trading at $15.70. The company has a .52% dividend yield, based on last night’s closing stock price of $15.30. The stock has technical support in the $12-$14 price area. If the shares can firm up, we see overhead resistance around the $18 price level. We would remain on the sidelines for now. Discover Financial Services (