13 Jul Dividend discount model (DDM)
Posted at 15:53h
in
The Dividend Discount Model is used to estimate a company’s stock price. The approach is founded on the view that the stock’s present value is equal to the current value of all future dividend payments when discounted back to the present. If the present value determined using the DDM is more than the current trading price, the company is undervalued, and a ‘buy’ decision is warranted.