How many types of growth model in the stocks?

Types of Growth Model:

1. Gordon Growth Model
2. Stock Valuation Model
3. Discount Cashflow Model
4. Free Cash Flow Model
5. Dividend Growth Model
6. Dividend Discount Model
7. Multi-stage Dividend Discount Model                                                              

1. Gordon Growth Model : The dividend-discount model is also called the Gordon growth model. It will help to use it to evaluate the stock's intrinsic value backed by a future series of dividends that rise at a continuous rate. In the easiest method, most investors will equate businesses to other industries. These are one of the forms of in-stock growth models.

Formula of Gordon growth model 

           p=D1/(k-g)

Here p= current
D1=expected annual dividend per following year
k= rate of return
g=growth rate than expected

2.  Stock valuation model:  When evaluating this method a company with a common stock share of interest is called stock valuation. There are two forms of the common stock share value. Absolute assessment and Relative analysis. Those kinds of models of growth. The main purpose of the stock valuation method is to define valued and undervalued stocks of the business as well as potential groth and overweight and under weight of them in an investment. Next, we must discuss discounted cash flow or absolute valuation.

3. Discount cashflow model:  The absolute valuation approach seeks to satisfy the intrinsic value of a stock by eliminating actual cash flows at a discount rate that indicates the inherent risk  of the stock. The discounted cah flow valuation model includes a constant dividend discount method for growth, a multi-stage dividend discount model and free cash flow model.

4. Free cash flow model: A minority's interest is managing equity dependent on a company's free cash flow in which cash flow operating operations less any work capital plans less any expected capital expenditure. The one-stage free cash flow model at year end discounts that the projected cash flow is considered a weighted average cost of capital.

Stock Value = FCF1/WACC − g
Here, FCF1 is the free cash flow at the end of 1 year. WACC means the weighted average cost of capital and g is the growth rate of free cash flows.

5. Dividend Growth model:  This measures the value of the stock, provided the dividends rise over the period of maturity at a constant rate or different prices. By calculating the dividend growth model, our investors will then compare the fair value with their current equity, before we assess the fair value.

Their common equity is overstated  or undervalued. Our investors can then agree that they want to sell or buy total returns from their portfolios. It is through this model that we can assume the rate of potential dividend growth. This distribution will give consideration to a constant growth rate during the maturity period or to different rates of a given period.

6. Dividend discount model:  Here dividend discount model approach is used to claim the expense of all potential dividend payments when discounted back to their present value is the company stock price that is based on the current price. By calculating this approach they will obtain the capital cost and value of next year's dividend for the company. This model is based on a company's value being present worth the amount of all its possible dividend payments. But the company does well in producing goods or in providing service to earn income. This is the various models  of growth in the stocks.

value of stock = excepted dividend per share/(cost of capital equity-dividend growth rate)
value of stock = D/(r-g)

7. Multi stage dividend model: The plan has some initial period for their company growth which is anticipated in the long-term stabilization of the valuation of the minority stake. The dividend per share is calculated as the average rate of growth of the initial years, the stock end value of the initially high growth  period is calculated using the single stage dividend growth model.

Stock Value =D1+D2+….+Dn+Vn/(1 + r)1(1 + r)2(1 + r)n(1 + r)n

Here D1, D2, D3, Dn is dividend per share at the end of 1,2,3,4 and Vn is called terminal value.

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