DFS vs V & MC

[DividendGarden]

I've owned V for a few years and have loved it.  I've never owned MA or DFS but have been watching them.  I just noticed that DFS is trading at 11 times earnings while V and MA are both over 30x.  Is that correct?  Why is DFS only at 11x?

[EricL]

My info shows the same of around an 11 PE.
 
A few things that stand out to me are the lower credit rating (BBB- vs. A+ and A), lower growth rate (7.3% vs. 16% and 17%) over the last 5 years, under-performance during the recession where earnings crashed compared with continued growth from MA and V, and lower growth forecasts of 8.25% vs. 16-17%.

I suppose a combo of all of that makes it less attractive to the market so it trades at a lower multiple.

[DividendGarden]

(11-15-2017, 10:41 AM)EricL Wrote: I suppose a combo of all of that makes it less attractive to the market so it trades at a lower multiple.

It's the same business model, but on a much smaller scale.  Hopefully, they've learned from their mistakes during the recession.  I'm going to keep a closer eye on DFS.

[divmenow]

You all left out AXP. To me that's the best buy in the group. Trading at only 15x next years earnings. DFS has always traded at a lower multiple. Good company but that doesn't get the respect it deserves on Wall Street.

[crimsonghost747]

I take a peek at V once in a while. I love the idea behind it and it's one of the few that are basically accepted in most corners of the world. I know I've used mine on 4 different continents. MA would certainly fit the bill too. But their P/E is just too high for me. Couple that with the minimal dividend.. actually I haven't looked into the reasons.

They both have a tiny tiny payout ratio, where are the profits going to?

Haven't looked at AXP, though it might be an option with a much more manageable P/E, or then I will just have to wait until a larger dip comes along before I go with V.

[divmenow]

I actually added to my V this morning. All this talk made me buy more lol. Usually that's a good sign when a lot of talk is going on these boards lol. V will be $200 in 3+ years. So I figured why wait when this is a long term play anyway!

[DividendGarden]

(11-15-2017, 02:36 PM)divmenow Wrote: You all left out AXP. To me that's the best buy in the group. Trading at only 15x next years earnings. DFS has always traded at a lower multiple. Good company but that doesn't get the respect it deserves on Wall Street.

Thanks for the reminder.  I've owned AXP since about 2008, when it was trading at about $11/share if I remember correctly.  Great company.

[DividendGarden]

(11-15-2017, 11:55 PM)crimsonghost747 Wrote: They both have a tiny tiny payout ratio, where are the profits going to?

I know that for V, AXP, and DFS, it's going to share buybacks.  Not sure about MA but should be easy to verify.

[DividendGarden]

(11-16-2017, 10:22 AM)divmenow Wrote: I actually added to my V this morning. All this talk made me buy more lol. Usually that's a good sign when a lot of talk is going on these boards lol. V will be $200 in 3+ years. So I figured why wait when this is a long term play anyway!

I initiated a position in DFS.  V is one of my larger holdings, but that's largely because I bought such a long time ago.  It hasn't stopped growing since I bought it.