Stock Price Calculator
Calculate the current stock price based on expected dividend and required rate of return using the Gordon Growth Model.
Published by:
isCalculator Editorial Team
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How to use this tool?
This calculator uses the Gordon Growth Model to estimate a stock's intrinsic value based on its expected dividends.
- Enter Expected Dividend (D): Input the anticipated dividend per share for the next period (e.g., $2.50). Must be a positive number.
- Enter Dividend Growth Rate (g) %: Input the expected annual growth rate of dividends (e.g., 5 for 5%). Can be zero.
- Enter Required Rate of Return (r) %: Input your required annual return (e.g., 10 for 10%). Must be greater than the growth rate.
- Click "Calculate Stock Price": The result shows the stock price using the formula: P = D / (r - g).
Important: All rates are entered as percentages (e.g., 5 for 5%). The calculator validates inputs and shows errors if values are invalid or if the required return is not greater than the growth rate.
Previous Results
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Frequently Asked Questions
The Gordon Growth Model (GGM) is a method to calculate the intrinsic value of a stock based on a future series of dividends that grow at a constant rate. It assumes dividends grow at a constant rate indefinitely.
You need the expected dividend per share (D), the dividend growth rate (g), and the required rate of return (r). The growth rate must be less than the required return.
The result is the estimated current stock price based on the inputs. If the actual market price is lower, the stock may be undervalued; if higher, it may be overvalued.
