Discover Financial Services, the credit-card spinout from Morgan Stanley set to be completed at the end of the month, began trading on a when-issued basis last week. Here’s my early, back-of-the-envelope take:
After I read the company’s initial registration filing when it came out in March. I came up with an earnings estimate for 2007 of between $1.70 and $1.75 per share. Assuming a 14 multiple, that implies a stock value of around $25, compared to the $31 it’s trading at now, when-issued. But Morgan Stanley/Discover put out an 8K Thursday that provided more details and history on Discover’s managed-basis earnings.