Discounted Cash Flow (DCF) Analysis Levered

Discover Financial Services (DFS)

$112.2

+1.42 (+1.28%)
All numbers are in Millions, Currency in USD
Stock DCF: 404.16 | 112.2 | undervalue

Free Cash Flow

Year
A/P
2017
Actual
2018
Actual
2019
Actual
2020
Actual
2021
Actual
2022
Projected
2023
Projected
2024
Projected
2025
Projected
2026
Projected
Revenue 9,89710,70911,45911,08812,08712,720.9713,388.1814,090.3914,829.4415,607.25
Revenue (%)
Operating Cash Flow 5,2085,1916,1966,1966,0196,636.376,984.457,350.787,736.338,142.11
Operating Cash Flow (%)
Capital Expenditure -218-254-284-261-194-280.16-294.86-310.32-326.60-343.73
Capital Expenditure (%)
Free Cash Flow 4,9904,9375,9125,9355,8256,356.216,689.597,040.467,409.747,798.38

Weighted Average Cost Of Capital

Share price $ 112.2
Beta 1.447
Diluted Shares Outstanding 307
Cost of Debt
Tax Rate 22.86
After-tax Cost of Debt 4.33%
Risk-Free Rate
Market Risk Premium
Cost of Equity 9.572
Total Debt 20,227
Total Equity 34,445.40
Total Capital 54,672.40
Debt Weighting 37.00
Equity Weighting 63.00
Wacc

Build Up Free Cash Flow

Year
A/P
2017
Actual
2018
Actual
2019
Actual
2020
Actual
2021
Actual
2022
Projected
2023
Projected
2024
Projected
2025
Projected
2026
Projected
Revenue 9,89710,70911,45911,08812,08712,720.9713,388.1814,090.3914,829.4415,607.25
Operating Cash Flow 5,2085,1916,1966,1966,0196,636.376,984.457,350.787,736.338,142.11
Capital Expenditure -218-254-284-261-194-280.16-294.86-310.32-326.60-343.73
Free Cash Flow 4,9904,9375,9125,9355,8256,356.216,689.597,040.467,409.747,798.38
WACC
PV LFCF 5,905.615,774.755,646.785,521.665,399.30
SUM PV LFCF 28,248.10

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 7.63
Free cash flow (t + 1) 7,954.35
Terminal Value 141,285
Present Value of Terminal Value 97,820.38

Intrinsic Value

Enterprise Value 126,068.48
Net Debt 1,991
Equity Value 124,077.48
Shares Outstanding 307
Equity Value Per Share 404.16