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Microsoft Excel LibreOffice Calc


Dividend Discount Model (DDM)

Difficulty: Intermediate

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Dividends are the cleanest and most straightforward measure of cash flow because these are clearly cash flows that go directly to the investor.


Intrinsic Stock Value (Valuation Summary)

Allergan PLC, dividends per share (DPS) forecast

USD $

Microsoft Excel LibreOffice Calc
Year Value DPSt or Terminal value (TVt) Calculation Present value at hidden%
0 DPS01 hidden
1 DPS1 hidden = hidden × (1 + hidden%) hidden
2 DPS2 hidden = hidden × (1 + hidden%) hidden
3 DPS3 hidden = hidden × (1 + hidden%) hidden
4 DPS4 hidden = hidden × (1 + hidden%) hidden
5 DPS5 hidden = hidden × (1 + hidden%) hidden
5 Terminal value (TV5) hidden = hidden × (1 + hidden%) ÷ (hidden% – hidden%) hidden
Intrinsic value of Allergan's common stock (per share) $hidden
Current share price $hidden

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

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.


Required Rate of Return (r)

Microsoft Excel LibreOffice Calc
Assumptions
Rate of return on LT Treasury Composite1 RF hidden%
Expected rate of return on market portfolio2 E(RM) hidden%
Systematic risk (β) of Allergan's common stock βAGN hidden
Required rate of return on Allergan's common stock3 rAGN hidden%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

Calculations

2 See Details »

3 rAGN = RF + βAGN [E(RM) – RF]
= hidden% + hidden [hidden% – hidden%]
= hidden%


Dividend Growth Rate (g)

Company does not pay dividends