What risks could impact DFS's future EPS?

Discover Financial Services (DFS) faces several risks that could impact its future Earnings Per Share (EPS):

1. Decelerating Loan Growth: DFS's recent deceleration in loan growth could challenge its revenue generation. As loan growth slows, the company may experience a decline in interest income, which can negatively affect EPS.
2. Merger Execution Risks: The upcoming merger with Capital One Financial presents execution risks that could impact DFS's future EPS. Integration challenges, potential write-downs, and delays in realizing synergies are common risks associated with mergers, which can affect the company's financial performance.
3. Credit Trends and Charge-Offs: While DFS has shown improvement in credit quality, as indicated by declining delinquency and net charge-off rates, any deterioration in credit trends could lead to higher charge-offs, which would negatively impact EPS.
4. Elevated Expenses and Credit Costs: Fitch Ratings has forecasted that DFS's profitability will moderate in 2025 due to elevated expenses and credit costs. Without non-recurring gains, DFS may face pressure on its EPS due to increased costs.

In summary, DFS's future EPS is subject to risks related to loan growth, merger execution, credit trends, and expenses. Investors should monitor these factors for signs of improvement or deterioration to assess their impact on DFS's financial performance.