Discover Financial stock (NYSE: DFS) has lost roughly 11% YTD, as compared to the 12% rise in the S&P500 over the same period. Further, at its current price of $87 per share, it is trading 22% below its fair value of $112 – Trefis’ estimate for Discover Financial’s valuation.
Interestingly, Discover Financial stock had a Sharpe Ratio of 0.3 since early 2017, which is lower than 0.6 for the S&P 500 Index over the same period. This compares with the Sharpe of 1.24 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.
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