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The Dividend Growth Model, often referred to as the Dividend Discount Model calculates the value of a stock based on the value of the future dividends paid by that company. This model does not take into consideration the current conditions in the market - only the value of the cash flows from the dividends.
The calculation is fairly simple. The formula is Stock Value = Next Years' Dividend / (Required Return - Expected Dividend Growth Rate)
So for example, if a company pays a dividend of $2.00 per share and you expect this to grow at 5% per year and your expected return on the stock is 10%. The intrinsic value of this stock is $42. If the current price of the stock is $36, then the stock could be considered undervalued. Conversely, if the stock is priced at $44, it would be overvalued, based on this intrinsic value.