Head to Head Review: Discover Financial Services (NYSE:DFS) and AEON Financial Service (OTCMKTS:AEOJF)

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

Valuation and Earnings

This table compares Discover Financial Services and AEON Financial Service”s 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	2.24	$2.94 billion	$8.77	17.70
AEON Financial Service	N/A	N/A	N/A	$143.79	0.06

Discover Financial Services has higher revenue and earnings than AEON Financial Service. AEON Financial Service is trading at a lower price-to-earnings ratio than Discover Financial Services, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

86.9% of Discover Financial Services shares are owned by institutional investors. Comparatively, 23.5% of AEON Financial Service shares are owned by institutional investors. 0.7% of Discover Financial Services shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Discover Financial Services and AEON Financial Service’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%
AEON Financial Service	N/A	N/A	N/A

Dividends

Discover Financial Services pays an annual dividend of $2.80 per share and has a dividend yield of 1.8%. AEON Financial Service pays an annual dividend of $47.78 per share and has a dividend yield of 514.9%. Discover Financial Services pays out 31.9% of its earnings in the form of a dividend. AEON Financial Service pays out 33.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Discover Financial Services has raised its dividend for 13 consecutive years.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Discover Financial Services and AEON Financial Service, as provided by MarketBeat.com.

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

Discover Financial Services presently has a consensus target price of $136.12, indicating a potential downside of 12.28%. Given Discover Financial Services’ higher probable upside, equities analysts clearly believe Discover Financial Services is more favorable than AEON Financial Service.

Summary

Discover Financial Services beats AEON Financial Service on 11 of the 13 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 AEON Financial Service

AEON Financial Service Co., Ltd., through its subsidiaries, provides various financial services in Japan. The company operates Retail, Solutions, China Area, Mekong Area, and Malay Area segments. It is involved in banking, short-term insurance, bank agency, ATM, housing and other loans, property leases, installment sales, life and non-life insurance agency, life insurance sales, loan purchases, credit card purchase contracts, collection and payment agency, credit card, and electronic money businesses, as well as bank and business management activities. In addition, the company engages in the management, collection, and purchase of specified monetary claims, and backup servicing businesses. AEON Financial Service Co., Ltd. was incorporated in 1981 and is based in Tokyo, Japan.