Dividend Discount Model - DDM

What Does Dividend Discount Model - DDM Mean?
A procedure for valuing the price of a stock by using predicted dividends and discounting them back to present value. The idea is that if the value obtained from the DDM is higher than what the shares are currently trading at, then the stock is undervalued.

Investopedia explains Dividend Discount Model - DDM
This procedure has many variations, and it doesn't work for companies that don't pay out dividends.

Related Terms

Attribute Bias
Discount Rate
Dividend
Gordon Growth Model
Multistage Dividend Discount Model
Overvalued
Undervalued
Valuation
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