Dividend Discount Model - DDM

A procedure for valuing the price of a stock by using predicted dividends and discounting them back to present value. The idea is that if the value obtained from the DDM is higher than what the shares are currently trading at, then the stock is undervalued.






Taobiz explains Dividend Discount Model - DDM
This procedure has many variations, and it doesn't work for companies that don't pay out dividends.