The Fair Price of Company Shares with Dividend Discount Model Method

Erren Bustami Kleriawan, Ilman Mufid Dwiyono

Abstract


This study aims to analyze the fair price of company shares in the LQ45 index with the dividend discount model (DDM) method during the 2014-2018 period. The analysis methodology using is a descriptive qualitative with data obtained from the Indonesia Stock Exchange with a case study approach, namely the 2014-2018 LQ45 Stock Price through LQ45 Stock Price Assessment analysis with the using Dividend Discounted Model (DDM) Method. The results of this study indicate that the fundamental analysis using the Dividend Discount Model (DDM) can be done after the intrinsic value of the stock is known then compared to its fair price so that it can be determined whether the stock is undervalued, fairvalued or overvalued.

Penelitian ini bertujuan menganalisa harga wajar saham perusahaan yang berada pada indeks LQ45 dengan metode dividend discount model (DDM) selama periode 2014-2018.Metodologi penelitian yang digunakan adalah metode deskriptif kualitatif dengan data series dan cross section dengan pendekatan studi kasus (case study) yakni pada Harga Saham LQ45 Tahun 2014-2018 melalui analisis Penilaian Harga Saham LQ45 dengan Dividend Discounted Model (DDM). Hasil dari penelitian ini menunjukkan bahwa secara analisis fundamental dengan menggunakan metode Dividend Discount Model (DDM) dengan metode Constant Growth Model dapat dilakukan setelah nilai intrinsik saham sudah diketahui kemudian dibandingkan dengan harga wajarnya sehingga dapat ditentukan apakah saham berada dalam kondisi undervalued, fairvalued atau overvalued

DOI: https://doi.org/10.26905/afr.v4i1.5960


Keywords


Dividend discount model, Stock prices, and Valuations

Full Text:

PDF

References


Agosto, A., & Moretto, E. (2014). Variance matters (in stochastic dividend discount models). Journal of Portfolio Management, 25(1), 31. https://doi.org/10.3905/jpm.1998.409658

Akbar, T., & Afiezen, A. (2018). Determination of Sharia Stock Price Through Analysis of Fundamental Factors and Macro Economic Factors. Account and Financial Management Journal, 03(10). https://doi.org/10.31142/afmj/v3i10.01

Artha, D. R., Achsani, N. A., & Sasongko, H. (2014). Analisis Fundamental , Teknikal dan Makroekonomi. Jurnal Manajemen Dan Kewirausahaan, 16(2), 175–183. https://doi.org/10.9744/jmk.16.2.175

Bakshi, G., & Chen, Z. (2001). Stock valuation in dynamic economies. Journal of Financial Markets, 8(2), 111–151. https://doi.org/10.1016/j.finmar.2005.01.001

Baresa, S., Bogdan, S., & Ivanovic, Z. A. (2013). Strategy of stock valuation by fundamental analysis. UTMS Journal of Economics, 4(1).

Blume, L., Easley, D., & O’Hara, M. (1994). Market Statistics and Technical Analysis. Journal of Finance, 49(1), 153–181.

Bower, D. H., & Bower, R. S. (1970). Test of a Stock Valuation Model. The Journal of Finance, 25(2).

Coleman, L. (2019). Fundamental Analysis of Equities", New Principles of Equity Investment, Emerald Publishing Limited, Bingley.

D’Amico, G., & De Blasis, R. (2020). A Review of the Dividend Discount Model: From Deterministic to Stochastic Models. In Statistical Topics and Stochastic Models for Dependent Data with Applications (pp. 47–67). https://doi.org/10.1002/9781119779421.ch3

Fuller, R. J., & Hsia, C.-C. (1984). A Simplified Common Stock Valuation Model. Financial Analysts Journal, 40(5), 49–56. https://doi.org/10.2469/faj.v40.n5.49

Ghezzi, L. L., & Piccardi, C. (2003). Stock valuation along a Markov chain. Applied Mathematics and Computation, 141(2–3), 385–393. https://doi.org/10.1016/S0096-3003(02)00263-1

Gilson, R. J. (2003). Engineering a Venture Capital Market: Lessons from the American Experience. Stanford Law Review, 55(4), 1067–1103. https://doi.org/10.2139/ssrn.353380

Hutomo, A., Topowijono, T., & Nuzula, N. (2016). Analisis Dividend Discound Model (DDM) untuk Valuasi Harga Saham Sebagai Dasar Keputusan Investasi (Studi Pada Perusahaan Yang Terdaftar Di Indeks LQ-45 Periode 2012-2014). Jurnal Administrasi Bisnis S1 Universitas Brawijaya, 37(2), 144–153.

Iwasaki, Y., Takenaka, M., & Matsushita, M. (2020). Supporting Fundamental Analysis for Investment Beginners based on Investment Behavior Model. The 34th Annual Conference of the Japanese Society for Artificial Intelligence, 1–4.

Lenee, T. L., & Oki, J. (2017). Capital Market Development and Economic Growth: Evidence from the Mint Countries. Journal of Economics and Sustainable Development, 8(2), 68–107. https://pdfs.semanticscholar.org/ab94/20d75af9878b05816a7b2c41d1dd9dbcce4c.pdf

Lin, Q. (2018). Technical analysis and stock return predictability: An aligned approach. Journal of Financial Markets, 38, 103–123. https://doi.org/10.1016/j.finmar.2017.09.003

Mehmood, W., Mohd-Rashid, R., Che-Yahya, N., & Ong, C. Z. (2020). Determinants of heterogeneity in investors’ opinions on IPO valuation: evidence from the Pakistan stock market. Review of Behavioral Finance. https://doi.org/10.1108/RBF-04-2020-0078

Nti, I. K., Adekoya, A. F., & Weyori, B. A. (2019). A systematic review of fundamental and technical analysis of stock market predictions. In Artificial Intelligence Review (Vol. 53, Issue 4). Springer Netherlands. https://doi.org/10.1007/s10462-019-09754-z

Oprea, O. R., & Stoica, O. (2018). Capital markets integration and economic growth. Montenegrin Journal of Economics, 14(3), 23–35. https://doi.org/10.14254/1800-5845/2018.14-3.2

Pahlevi, R. W., & Oktaviani, I. I. (2018). Determinants of Individual Investor Behaviour in Stock Investment Decisions. AFRE (Accounting and Financial Review), 1(2), 53–61. https://doi.org/10.26905/afr.v1i2.2427

Pastor, L., & Veronesi, P. (2002). Stock valuation and learning about profitability.

Picasso, A., Merello, S., Ma, Y., Oneto, L., & Cambria, E. (2019). Technical analysis and sentiment embeddings for market trend prediction. Expert Systems with Applications, 135, 60–70. https://doi.org/10.1016/j.eswa.2019.06.014

Setiawan, Y. C., Atahau, A. D. R., & Robiyanto, R. (2018). Cognitive Dissonance Bias, Overconfidence Bias dan Herding Bias dalam Pengambilan Keputusan Investasi Saham. AFRE (Accounting and Financial Review), 1(1), 17–25. https://doi.org/10.26905/afr.v1i1.1745

Sharafoddin, S., & Emsia, E. (2016). The Effect of Stock Valuation on the Company’s Management. Procedia Economics and Finance, 36(16), 128–136. https://doi.org/10.1016/s2212-5671(16)30024-7

Sim, T., & Wright, R. H. (2017). Stock valuation using the dividend discount model: An internal rate of return approach. Growing Presence of Real Options in Global Financial Markets, 33, 19–32. https://doi.org/10.1108/S0196-382120170000033002

Stiglitz, J. E. (2000). Capital market liberalization, economic growth, and instability. World Development, 28(6), 1075–1086. https://doi.org/10.1016/S0305-750X(00)00006-1

Sugiyanto, S. C., & Robiyanto, R. (2020). Integrasi Dinamis Pasar Modal Indonesia Dengan Pasar Modal In- ternational Pada Masa Pandemi Covid-19. AFRE Accounting and Financial Review, 3(2), 143–151.

Sugiyono. (2016). Metode Penelitian Kuantitatif, Kualitatif dan R&D. Penerbit Alfabeta. Ban-dung

Yan, X. S., & Zheng, L. (2017). Fundamental analysis and the cross-section of stock returns: A data-mining approach. Review of Financial Studies, 30(4), 1382–1423. https://doi.org/10.1093/rfs/hhx001

Yardeni, E. (2003). Stock valuation models (4.1). Prudential Financial Research, 58(212), 1–31.




DOI: https://doi.org/10.26905/afr.v4i1.5960

Refbacks

  • There are currently no refbacks.






AFRE (Accounting and Financial Review)
Postgraduate University of Merdeka Malang



width="145"indexwidth="150" Index Copernicus International (ICI)
crossrefTurnitin


Postgraduate, University of Merdeka Malang,
Terusan Dieng Street 62-64, Malang City, East Java, 65146, Indonesia.
Phone : (0341) 567617 Fax : (0341) 567617 Email jurnalafre@unmer.ac.id

Whatsapp : +6281332373081
Web
Analytics View My Stats

AFRE (Accounting and Financial Review)  Creative Commons License This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Copyright ©2021 University of Merdeka Malang Powered by Open Journal Systems.