4 Stocks Trading Below the DCF Value

Based on the discounted cash flow model, these stocks may be undervalued by the market

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Aug 29, 2022
Summary
  • Dell Technologies, Bank of New York Mellon, Manulife Financial and Toronto-Dominion Bank could be bargains.
  • Their share prices are below their discounted cash flow values.
  • Wall Street sell-side analysts issued positive ratings for these companies.
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When screening the market for bargains, investors may want to consider the following stocks since their share prices are trading below or around the intrinsic value calculated by GuruFocus' free cash flow-based discounted cash flow calculator.

Additionally, Wall Street has issued positive recommendation ratings for these stocks, which means they expect higher share prices over the coming months.

Dell Technologies

The first stock investors could be interested in is Dell Technologies Inc. (

DELL, Financial), a Round Rock, Texas-based developer and manufacturer of IT hardware, software and high technology solutions.

The stock closed Friday at $41.43 a share, below the intrinsic value of $58.45 calculated using the free cash flow-based DCF model. The comparison gives Dell Technologies a margin of safety of 29.12%.

The share price has dropped by 16.56% over the past year, determining a market capitalization of $30.64 billion and a 52-week range of $38.32 to $61.54.

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GuruFocus rated the company's financial strength and profitability 4 out of 10.

The company pays cash dividends quarterly. The most recent payment on July 29 was 33 cents per common share. The payment determines a trailing dividend yield of 1.59% and a forward dividend yield of 3.19% at the time of writing.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $55.70 per share.

Bank of New York Mellon

The second stock investors could be interested in is Bank of New York Mellon Corp. (

BK, Financial), a New York-based provider of various financial products and services to American and international clients.

The stock closed Friday at $42 a share, below the intrinsic value of $72.04 calculated using the DCF model. The comparison gives Bank of New York Mellon a margin of safety of 72.58%.

The share price has dropped by 23.89% over the past year, determining a market capitalization of $33.94 billion and a 52-week range of $39.78 to $64.63.

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GuruFocus has assigned a score of 4 out of 10 to the company's financial strength and a 6 out of 10 rating to its profitability.

Currently, the company pays quarterly cash dividends to its shareholders. The most recent distribution was paid on Aug. 5, rewarding shareholders with 37 cents per common share. At the time of writing, the payment results in a trailing dividend yield of 3.31% and a forward dividend yield of 3.52%.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $48.57 per share.

Manulife Financial

The third stock investors could be interested in is Manulife Financial Corp. (

MFC, Financial), a Canadian insurance and asset management company serving individuals and institutional clients in North America and internationally.

The stock closed Friday at $17.75 a share, below the intrinsic value of $104.43 calculated using the DCF model. The comparison gives Manulife Financial a margin of safety of 86.75%.

The share price has decreased by 8.70% over the past year for a market capitalization of $34.27 billion and a 52-week range of $16.27 to $22.19.

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GuruFocus has assigned a score of 5 out of 10 to the company's financial strength and 7 out of 10 to its profitability.

The company will pay a quarterly cash dividend of 19 Canadian cents (15 cents) per share on Sept. 19. The payment will be in line with the previous one issued on June 20. The payment determines a 5.75% trailing dividend yield and a 5.71% forward dividend yield at the time of writing.

On Wall Street, the stock has a median recommendation rating of hold and an average target price of $21.19 per share.

Toronto-Dominion Bank

The fourth stock investors could be interested in is The Toronto-Dominion Bank (

TD, Financial), a Toronto-based provider of various banking products and services to households and businesses in North America. The company offers its products and services under the TD Bank and America's Most Convenience Bank brand names and operates 1,061 branches and 3,381 cash dispensers in Canada and 1,148 stores and 2,701 cash dispensers in the U.S.

The stock closed Friday at $66.60 a share, below the intrinsic value of $131.39 calculated using the DCF model. The comparison gives Toronto-Dominion Bank a margin of safety of 74.21%.

The share price has risen by 1.45% over the past year for a market capitalization of $121.11 billion and a 52-week range of $58.64 to $86.01.

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GuruFocus has assigned a score of 3 out of 10 to the company's financial strength and 6 out of 10 to its profitability.

The company will pay a quarterly cash dividend on Oct. 31 of 89 Canadian cents per common share. The payment will be in line with the previous one issued on July 31. The payment determines a 4.07% trailing dividend yield and a 4.12% forward dividend yield as of this writing.

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $85.40 per share.

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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