Discounted Cash Flow (DCF) Analysis Unlevered

Discover Financial Services (DFS)

$112.2

+1.42 (+1.28%)
All numbers are in Millions, Currency in USD
Stock DCF: 320.36 | 112.2 | undervalue

Operating Data

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 (%)
EBITDA 5,5786,1716,8013,7858,7297,115.857,489.077,881.888,295.288,730.37
EBITDA (%)
EBIT 5,1855,7366,3653,3008,1986,591.626,937.357,301.217,684.168,087.20
EBIT (%)
Depreciation 393435436485531524.23551.73580.67611.12643.18
Depreciation (%)

Balance Sheet Data

Year
A/P
2017
Actual
2018
Actual
2019
Actual
2020
Actual
2021
Actual
2022
Projected
2023
Projected
2024
Projected
2025
Projected
2026
Projected
Total Cash 13,30613,2996,92416,22518,23615,678.7516,501.1117,366.5918,277.4719,236.13
Total Cash (%)
Account Receivables ---9441,029.051,083.031,139.831,199.621,262.541,328.76
Account Receivables (%)
Inventories ----------
Inventories (%)
Accounts Payable ----------
Accounts Payable (%)
Capital Expenditure -218-254-284-261-194-280.16-294.86-310.32-326.60-343.73
Capital Expenditure (%)

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

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
EBITDA 5,5786,1716,8013,7858,7297,115.857,489.077,881.888,295.288,730.37
EBIT 5,1855,7366,3653,3008,1986,591.626,937.357,301.217,684.168,087.20
Tax Rate 40.66%23.77%22.89%20.49%22.86%26.13%26.13%26.13%26.13%26.13%
EBIAT 3,076.994,372.564,907.772,623.906,323.744,868.965,124.345,393.115,675.985,973.68
Depreciation 393435436485531524.23551.73580.67611.12643.18
Accounts Receivable -----85.05-53.97-56.80-59.78-62.92-66.22
Inventories ----------
Accounts Payable ----------
Capital Expenditure -218-254-284-261-194-280.16-294.86-310.32-326.60-343.73
UFCF 3,251.994,553.565,059.772,847.906,575.695,059.055,324.405,603.675,897.586,206.91
WACC
PV UFCF 4,700.414,596.264,494.414,394.814,297.43
SUM PV UFCF 22,483.32

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 7.63
Free cash flow (t + 1) 6,331.05
Terminal Value 112,452.01
Present Value of Terminal Value 77,857.51

Intrinsic Value

Enterprise Value 100,340.83
Net Debt 1,991
Equity Value 98,349.83
Shares Outstanding 307
Equity Value Per Share 320.36