Procter & Gamble Co. (PG) | Dividend Discount Model (DDM)

¹ DPS₀ = Sum of last year dividends per share of 's common stock. See details »

² See Details »

³ r_PG = R_F + β_PG [E(R_M) – R_F]
= 2.81% + 0.39 [13.12% – 2.81%]
= 6.80%

¹ Retention rate = (Net earnings attributable to Procter & Gamble – Dividends to shareholders, common – Dividends to shareholders, preferred, net of tax benefits) ÷ (Net earnings attributable to Procter & Gamble – Dividends to shareholders, preferred, net of tax benefits)
= (10,756 – 5,883 – 256) ÷ (10,756 – 256) = 0.44

² Profit margin = 100 × (Net earnings attributable to Procter & Gamble – Dividends to shareholders, preferred, net of tax benefits) ÷ Net sales
= 100 × (10,756 – 256) ÷ 83,680 = 12.55%

³ Asset turnover = Net sales ÷ Total assets
= 83,680 ÷ 132,244 = 0.63

⁴ Financial leverage = Total assets ÷ Shareholders' equity attributable to parent
= 132,244 ÷ 63,439 = 2.08

⁵ g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.57 × 14.45% × 0.59 × 2.08 = 10.15%

g = 100 × (P₀ × r – D₀) ÷ (P₀ + D₀)
= 100 × ($78.70 × 6.80% – $2.14) ÷ ($78.70 + $2.14) = 3.98%

where:
P₀ = current price of share of 's common stock
D₀ = last year dividends per share of 's common stock
r = required rate of return on 's common stock

where:
g₁ is implied by PRAT model
g₅ is implied by Gordon growth model
g₂, g₃ and g₄ are calculated using linear interpoltion between g₁ and g₅

g₂ = g₁ + (g₅ – g₁) × (2 – 1) ÷ (5 – 1)
= 10.15% + (3.98% – 10.15%) × (2 – 1) ÷ (5 – 1) = 8.61%

g₂ = g₁ + (g₅ – g₁) × (3 – 1) ÷ (5 – 1)
= 10.15% + (3.98% – 10.15%) × (3 – 1) ÷ (5 – 1) = 7.06%

g₂ = g₁ + (g₅ – g₁) × (4 – 1) ÷ (5 – 1)
= 10.15% + (3.98% – 10.15%) × (4 – 1) ÷ (5 – 1) = 5.52%