Gordon Growth Model
Single-stage DDM assuming constant dividend growth in perpetuity.
The Gordon Growth Model (GGM) is the simplest form of the dividend discount model. It values a stock as next year's dividend divided by the difference between the required return and the constant growth rate. The model is most appropriate for mature, stable companies with predictable dividend policies. It produces NaN when growth equals or exceeds the required return.
Dividend Discount Model (DDM)
Values a stock as the present value of future dividends.
H-Model
Two-stage DDM with linear growth decay from high to stable rate.
Cost of Equity
The return shareholders require to compensate for investment risk.
Market Capitalization
Share price multiplied by shares outstanding — the total equity value.
Enterprise Value (EV)
Market cap plus net debt — the total acquisition value of the business.
P/E Ratio
Share price divided by earnings per share — how much you pay per dollar of profit.