How does the Gordon Growth Valuation Method work?

The Gordon Growth Valuation model values a company or an asset based on an income stream which is assumed to grow until eternity. All you need is a Stable Dividend or Cash Flow Stream, the Discount Rate, and a growth rate. The Gordon Growth Model and Formula will offer an easy way to obtain a quick idea about the potential valuation of a business.

This video explains in simple terms step by step how to use the Gordon Growth valuation method in two situations:


1) Valuing stocks based on their future Dividend income stream, the stocks Discount Rate, and the expected Dividend Growth rate
2) Estimating the Terminal Value in a Discounted Free Cash Flow valuation approach via the Gordon Growth formula.

Contents of this Video

0:00 Intro
0:36 What is Gordon Growth Valuation Method?
0:50 How does the Gordon Growth Valuation Method Work?
1:14 How to Calculate the Value per share in Excel using Gordon Growth Formula?
4:14 Who uses the Gordon Growth Valuation Model?
4:22 How to Calculate the Terminal Value using the Gordon Growth Model in a DCF Valuation?
4:33 Step-by-Step Calculation of Terminal Value in Excel using the Gordon Growth Model in a DCF Valuation


Let us know if you understood how to use the Gordon Growth Valuation method or if you have any additional questions or comments.



Please also refer to our Article describing the Gordon Growth Valuation Method step by step:
https://www.efinancialmodels.com/know...