Stock Valuation Calculator

What does it do?

This stock valuation calculator uses the present value of growing perpetuity formula to calculate the stock valuation based on a series of ever increasing dividend payments.

The stock valuation formula is based on the Gordon growth model which is discussed in more detail in our How to Value a Stock tutorial.

Because of the requirement for a constantly growing dividend payment, the calculator is best suited to a stable business which is expected to experience steady growth, and to pay out regular increasing dividends to shareholders.

Stock Valuation Formula

The calculator uses the present value of a growing perpetuity formula as shown below:

PV = Stock Price = Pmt / (i - g)
Variables used in the formula
Pmt = Dividend at the end of the first year (Periodic payment)
i = Rate of return for equity investors (Discount rate)
g = Dividend growth rate

Instructions

The Excel stock valuation calculator, available for download below, is used to compute a stock valuation by entering details relating to the first dividend, the constant dividend growth rate, and the investors required rate of return. The calculator is used as follows:

stock valuation calculator v 1.0
Stock Valuation Calculator Preview

Step 1

Enter the first dividend (Pmt). This is the dividend received at the end of the first period.

Step 2

Enter the dividend growth rate (g). The dividend growth rate is the rate at which the first dividend (Pmt) is growing each period. The rate should be for a period, so for example, if the period is a year, then the rate should be the yearly dividend growth rate.

Step 3

Enter the required investor return rate (i). The required investor return rate is the rate used to discount each payment amount back from the end of the period in which is was made, to the beginning of period 1 (today). The rate should be for a period, so for example, if the period is a year, then the rate should be the yearly rate.

Step 4

The stock valuation calculator works out the present value of the dividend payments which is amount an investor should be prepared to pay for the stock. The answer is the value today (beginning of period 1) of an a regular dividend which is growing at a constant rate (g), received at the end of each period forever, and discounted at the investors required rate of return (i).

Stock Valuation Calculator Download

The stock valuation calculator spreadsheet is available for download in Excel format by following the link below.

The stock valuation calculator is one type of tvm calculator used in time value of money calculations, discover another at the links below.

Notes and major health warnings
Users use this free share valuation calculator at their own risk. We make no warranty or representation as to its accuracy and we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of a stock share calculator that you might use when considering how to value a share. It is purely illustrative of a common stock valuation calculator. This is not intended to reflect general standards or targets for any particular business, company or sector. If you do spot a mistake in this stock price calculator, please let us know and we will try to fix it.
Stock Valuation Calculator November 6th, 2016Team

You May Also Like


Related pages


labor efficiency variance calculatordepreciation charges on fixed assetstime sheet formateom meanword voucher templatedouble entry for provision for bad debtshow to calculate the markupdefine debitorbeginning finished goods inventory formulahow to calculate profit markupdeferred billing definitionreturn on common stockholders equity calculatormarkup percent calculatorexamples of payback periodhow to calculate mortgage balance remainingwhat is fixed asset turnover ratiodegrees of operating leverageaccounting bank reconciliation templatestandard costing examplerent ledger templatebasic accounting quizdiminishing depreciation formulaallowance for doubtful accounts t accountdepreciation using the declining-balance methodmark up to marginsuspense account in trial balanceformat of petty cash bookinsurance paid in advance journal entryprepayments in balance sheetwhat is accounts receivable agingmarkup calculator exceladjusting entry for prepaid rentprepayment double entryformula for annuity future valueaccumulated depreciation asset or liabilitycogs accountingis depreciation a fixed or variable costpv of an annuity formulaformula for calculating gross profit marginproveit test answersexample of an accrued expenseinventory obsolescence accountingmeaning of petty cash bookdefinition of accrued expensescheque voucher templatebond carrying value equals bonds payablepost closing trial balance should only containexamples of capital receiptsfreight expense accountingequity gearingbasic accounting knowledge testprepaid freight definitioncalculation of payback period examplefunction pmtamortization definition and example12 column worksheet accountingprofit margin formula excelmerchandise inventory current assetmaterial requisition formatfactory overheadsexcel formula irrobjectivity principle accountingfinance lease journal entrieswip sheetcashier balance sheetaccounting excel spreadsheetsales discounts on income statementaged trial balance of accounts receivablewhat is sales ledger control accountpre determined overhead ratereinsurance accounting entriesgeneral journal adjusting entrieswhere does accrued interest go on the balance sheetfiguring markup percentagecash deposited in bank journal entry in tallydeclining balance method calculator