DFS Price Forecast Based on Dividend Discount Model

For dividend yielding stocks, the Dividend Discount Model (DDM) is a common valuation tool; it attempts to extrapolate a fair share price based primarily on the dividend the stock provides relative to a number of other quantiative aspects of its business. Regarding Discover Financial Services, the DDM model generated by StockNews estimates a return of negative 75.5% in comparison to its current price. Digging deeper, the aspects of Discover Financial Services's dividend discount model that we found most interesting were:

• In comparison to other US listed dividend yielding stocks in the Financial Services sector, Discover Financial Services's expected return of -75.5% is higher than only 10.06% of its fellow sector mates.
• Out of all stocks in our universe of US-listed dividend-issuing stocks, Discover Financial Services bears a discount rate, according to our calculations, lower than only 10.06% of them (lower discount rates are generally perceived as positive, and a sign of lower risk).
• Beta tells us how volatile a stock's price is relative to the broader equity index; for Discover Financial Services, its beta is lower than only 1.87% of dividend issuing stocks we observed.
• In comparison to its fellow dividend issuing stocks in the Financial Services sector, Discover Financial Services has an equity discount rate lower than only 1.78% of them.

DFS Dividends vs. Peers