Public company

Gordon growth model

A share is worth the dividends it will pay, discounted. Load a company and the trailing dividend, its growth over the last three, five or ten years, and the current price all come from its own record. Growth runs explicitly for as many years as you set and then settles into a perpetual rate. Set the explicit years to zero and you have the textbook one-line model. It values a dividend payer and nothing else, and it says so rather than guessing when the company pays nothing.

No company loaded

Assumptions

Company

The dividend

Dividend per share$

Trailing twelve months. D0 in the formula.

Current price$

For the comparison. Leave at zero to value the stream without one.

Growth

Explicit years

Zero gives the single stage model, D1 over r minus g.

Growth in the phase%

Seeded from the company's own dividend record.

Fade to the terminal rateSteps growth down across the phase instead of dropping it in one year at the end.

Terminal growth%

Forever. Has to stay below the cost of equity.

Cost of equity

Risk-free rate%

10 year Treasury. Enter it manually if the feed is quiet.

Beta

MANUAL

Levered. The market data vendor does not publish one, so this is yours to set.

Equity risk premium%

The premium over the risk-free rate the market is assumed to demand.

Cost of equity9.20%

rf + beta x ERP

Value per share

$34.85

How this was built

Loaded dividends and price from Tickerbot, risk-free rate from FRED or the US Treasury

Calculation build. Each row is one step of the workings, the arithmetic that produced it where there is any, and its value.
Dividend per share, trailingMANUAL	$2.00
Cost of equityCAPM	9.20%
Growth, years 1 to 10Faded to 2.50% by year 10	6.00%
PV of dividends in the phase10Y	$15.94
Terminal growth	2.50%
Dividend in year 11The last dividend grown one more year	$3.06
Terminal value at year 10D / (9.20% - 2.50%) = $45.60	$45.60
PV of terminal value	$18.91
Value per share	$34.85
Terminal share of value	54.26%

The explicit phase

Forecast by year, Y1 to Y2 to Y3 to Y4 to Y5 to Y6 to Y7 to Y8 to Y9 to Y10, containing dividends year by year.
Line item	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Dividends year by year
Dividend growth	5.65%	5.30%	4.95%	4.60%	4.25%	3.90%	3.55%	3.20%	2.85%	2.50%
Dividend per shareWorking, Y1: Prior year grown at that year's rate	$2.11	$2.22	$2.34	$2.44	$2.55	$2.65	$2.74	$2.83	$2.91	$2.98
Discount factorWorking, Y1: 1 / (1 + cost of equity) ^ year	0.9158	0.8386	0.7679	0.7032	0.6440	0.5897	0.5401	0.4946	0.4529	0.4147
Present value	$1.93	$1.87	$1.79	$1.72	$1.64	$1.56	$1.48	$1.40	$1.32	$1.24

Sensitivity

Value per share. Hatched cells are combinations with no finite value

Sensitivity table. Rows vary Cost of equity, columns vary Terminal growth. The base case cell is marked "base case".
Cost of equity downTerminal growth across	1.50%	2.00%	2.50%	3.00%	3.50%
8.20%	$35.86	$38.26	$41.08	$44.44	$48.51
8.70%	$33.31	$35.35	$37.72	$40.49	$43.80
9.20%	$31.10	$32.85	$34.85 base case	$37.18	$39.91
9.70%	$29.15	$30.67	$32.39	$34.37	$36.66
10.20%	$27.43	$28.75	$30.25	$31.94	$33.89