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Non-Tech : SPIN-OFFS "secret hiding places of stock market profits"
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To: Paul Senior who wrote (1100)6/29/2007 3:48:06 PM
From: Stewart Whitman  Read Replies (1) of 1185
 
There are at least a few good points for DFS:

1. There will be significant SAR's allocated to management & employees. A lot of management incentive.

2. Some have speculated that a the large banks are said to be interested in acquiring it so that they can issue cards. B of A has said suggested that it is considering starting it's own payment network to process credit cards because of the savings it could obtain. Discover would be an obvious acquisition target.

3. Earnings should be about $1.70 to $1.80 or so. Thats make the the P/E at the current stock price around 17x. With a little growth, maybe 15x next year's earnings.

4. Management seems to be improving performance and operating results. Their UK performance seems to have hurt results. But then again, it is a relatively recent acquisition.

5. Recent court rulings tend to favor Amex/Discover vs. MC/Visa.

So, I like it. Opportunity for improvement, enough incentive, potential acquisition, not too expensive.

Regards,
Stew
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