Comparison of DCF Valuation and DDM Valuation of Stock Price of Boyd Gaming Corporation
DOI:
https://doi.org/10.54097/6dqxyk06Keywords:
DCF, DDM, FCFF, CAPM, WACCAbstract
The valuation of a company is done through different approaches and models by analysts. The common models utilized by the analysts are the dividend discount model (DDM) and discounted cash flow model (DCF). Some analysts rely on the dividends to analyze the stocks and some analysts rely on the free cash flows to analyze different stocks. The following report determines the accuracy of the two models. The models have been analyzed using the Boyd Gaming Corporation, a publicly listed stock on the New York Stock Exchange. The stock exchange is one of the biggest and most developed markets. Therefore, the market is efficient and states that the market price reflects the true share price or intrinsic share price as per the efficient market hypothesis. The DMM model stated that the stock is underpriced and the DCF model stated that the stock price is overpriced. The results of the study concluded that the discounted cash flow model is more accurate in determining the market price of the share in comparison to the dividend discount model.
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