Dividend Discount Model (DDM)
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.
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- Income Statement
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- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Return on Assets (ROA) since 2013
- Current Ratio since 2013
- Total Asset Turnover since 2013
- Price to Book Value (P/BV) since 2013
- Analysis of Debt
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Intrinsic Stock Value (Valuation Summary)
RH, dividends per share (DPS) forecast
US$
| Year | Value | DPSt or Terminal value (TVt) | Calculation | Present value at |
|---|---|---|---|---|
| 0 | DPS01 | |||
| 1 | DPS1 | = × (1 + ) | ||
| 2 | DPS2 | = × (1 + ) | ||
| 3 | DPS3 | = × (1 + ) | ||
| 4 | DPS4 | = × (1 + ) | ||
| 5 | DPS5 | = × (1 + ) | ||
| 5 | Terminal value (TV5) | = × (1 + ) ÷ ( – ) | ||
| Intrinsic value of RH common stock (per share) | ||||
| Current share price | ||||
Based on: 10-K (reporting date: 2023-01-28).
1 DPS0 = Sum of the last year dividends per share of RH 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)
| Assumptions | ||
| Rate of return on LT Treasury Composite1 | RF | |
| Expected rate of return on market portfolio2 | E(RM) | |
| Systematic risk of RH common stock | βRH | |
| Required rate of return on RH common stock3 | rRH | |
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).
3 rRH = RF + βRH [E(RM) – RF]
= + [ – ]
=
Dividend Growth Rate (g)
Company does not pay dividends.