DCF is a pretty good valuation method, but like any has its flaws. The main problem is it makes assumptions (growth rate, time value of future cash flow, cost of capital, assumed discount rate). A small variance in any of these inputs into the model can result in wide variance of perceived value of the stock. In addition, it doesn't account for 'other' possible changes. For example, DOL could make a significantly accretive acquisition in the future, and a DCF analysis has no way of projecting this type of move. On the cost of capital, a change in the valuation of DOL, for whatever reason, could lower its cost of capital and this would impact its DCF value. A drop in interest rates will also impact perceived value. There is really no perfect analysis, but DCF does give a reasonable framework from which to work with.
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