Record profit drives Discover shares

Discover Financial Services, the payments network whose stock has outperformed three larger rivals, climbed to the highest in more than three years after posting record profit and boosting the dividend.

The shares rose 96 cents, or 4.3 percent, to $23.21 at 12:34 p.m. in New York Stock Exchange composite trading and earlier touched $23.46, the highest since September 2007.

“Continuing one of the steadiest, surprise-free rebounds we have seen in financials since the 2009 market lows, Discover put up another impressive quarter,” Bruce Harting, an analyst at Barclays Plc, said today in a note to clients. Harting, who has an “overweight” rating on Discover, increased his 12-month share-price estimate to $28 from $26.

Net income for the three months ended Feb. 28 was $465 million, or 84 cents a share, compared with a loss of $104 million, or 22 cents, in the same period a year earlier, Riverwoods-based Discover said yesterday in a statement. The company tripled its quarterly dividend to 6 cents a share.

Discover shares gained 45 percent in the past year through yesterday. San Francisco-based Visa Inc., the world's biggest payments network, dropped 20 percent and MasterCard Inc., based in Purchase, New York, declined 0.2 percent. New York-based American Express Co., the third-biggest network and the biggest credit-card issuer by purchases, climbed 8.9 percent.