It has been about a month since the last earnings report for Discover (NYSE: DFS). Shares have lost about 8.5% in that time frame, underperforming the S&P 500. Will the recent negative trend continue leading up to its next earnings release, or is Discover due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. Discover Q2 Earnings Beat on High Interest Income Discover Financial reported strong second-quarter results supported by interest income growth, thanks to a high-interest rate environment, lower provision for credit losses, growing loans, PULSE volumes and margin expansion. The positives were partially offset by higher expenses. It reported second-quarter 2024 adjusted earnings per share of $6.06, which comfortably beat the Zacks Consensus Estimate of $3.06. Also, the bottom line jumped 71% year over year. Discover Financial's revenues, net of interest expenses, climbed 17% year over year to $4.5 billion. The top line also beat the consensus mark by 9.1%. Q2 Operational Update Interest income of nearly $5 billion jumped 16% year over year and beat our model estimate of $4.9 billion. Interest expense increased 30% year over year to $1.45 billion in the quarter under review but remained below our model estimate of $1.49 billion. Non-interest income jumped 45% year over year to $1 billion and beat the Zacks Consensus Estimate by 41.6%. Total operating expenses of $1.7 billion escalated 23% year over year due to increased employee compensation and benefits expenses, professional fees, information processing & communications costs and other expenses. The figure came higher than our estimate of $1.5 billion. Moreover, operating efficiency (total operating expenses divided by revenues, net of interest expenses) deteriorated ...