Barclays Sums Up Fed Stress Test Outcomes For Consumer Finance

After the close Wednesday, American Express Company (NYSE: AXP) and Discover Financial Services (NYSE: DFS) submitted their Comprehensive Capital Analysis and Review (CCAR). Santander Consumer USA Holdings Inc (NYSE: SC) failed the qualitative test Wednesday.

Barclay's Mark DeVries commented on the three companies, highlighting Discover Financial Services' better-than-expected results and Santander's and American Express' disappointing test results.

American Express

DeVries claimed American Express results fell short of expectations. "AXP plans on increasing its dividend to $0.32/sh (from $0.29/sh), better than our $0.31/sh forecast, and plans on repurchasing up to $3.3 billion of shares in the four quarter CCAR period of 3Q16 through 2Q17, trailing our total buyback forecast of ~$4.9 billion," stated the analyst.

Related Link: Stress Test Finale: Everything You Need To Know About Banks Returning Profits To Shareholders

DeVries thought the disappointment could pressure American Express shares during Thursday's trading, but analyst estimates were not likely to move in the future.

Discover Financial Services

DeVries praised Discover Financial Services' total planned capital return of $139 million, which was better than expected. He expected the pleasant surprise to translate "into a slightly higher than expected payout ratio (~101 percent vs. our 97 percent forecast) on our earnings forecast."

Discover's dividend increase miss on the analyst's expectations ($0.30 vs. $0.32 estimate) was offset by higher than expected forecast buybacks ($195 billion vs. $181 billion estimates), however.

Santander Consumer Holdings

DeVries said Santander Consumer Holding's Parent organization, SHUSHA, failed on qualitative concerns, as expected. "Similar to last year's result, SC's parent SHUSA failed CCAR for the third year in a row based on qualitative concerns."

The negative results should not move the stock too much, said DeVries. "Most investors did not expect SHUSA to pass this year, so we do not expect the results will weigh heavily on the stock."