// by seankriegler.com
Share Price Calculator
Estimate a stock's fair value with two classic methods: the Gordon Dividend Discount Model and the P/E multiple
Gordon Growth Model
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Fair Price (DDM)
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Next Year Dividend
P/E Multiple
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Implied Share Price
// Gordon Model
Price = Dā / (r ā g). Only valid when the required return r is greater than the dividend growth rate g.
// P/E Method
Multiply earnings per share by a peer-group P/E to get a quick relative valuation.
// Use Both
The two methods give very different answers ā use them as sanity checks rather than absolute targets.