R/Single_DDM.R

In JancoS/EquityR: Common stock valuation methods. Including single stage DDM, multistage DDM and basic CF models. Package mainly builds on the tidyquant and finreportr packages.

#' @title Single_DDM
#' @description The function calculates stock value based on a single stage DDM model (Gordon Growth Model)
#' @param Ticker  Provide the stock ticker, which will be searched for on morningstar and yahoo finance
#' @param Req The required rate of return used for discounting as a fraction
#' @param growth_rate growth_rate
#' @export
#' @seealso \code{\link[tidyquant]{tq_get}}
#' @return DDM_Out The results of the DDM model
#' @examples  {
#'
#' #Ticker <- "MSFT"
#' #Req <- 0.12
#' #growth_rate <- 0.1
#'  # Single_Stage_DDM <- Single_DDM(Ticker, Req, growth_rate)
#'
#' }

Single_DDM <- function(Ticker, Req, growth_rate) {

  # First collect the data required from morningstar

  MData <- as_tibble(tq_get(Ticker, get = "key.ratios"))

  # What do you need for a DDM?
  # 1. The required rate of return
  # 2. The terminal growth rate g
  # 3. The latest dividend

  Divs <- MData %>%
    filter(section == "Financials") %>%
    select(data) %>% unnest() %>%
    filter(category == "Dividends USD")

  Div_latest <- Divs %>%
    filter(row_number() == nrow(Divs)) %>% pull(value)

  # 4. The ROE

  ROE <- MData %>%
    filter(section == "Profitability") %>%
    select(data) %>% unnest() %>%
    filter(category == "Return on Equity %")

  ROE_latest <- ROE %>%
    filter(row_number() == nrow(ROE))

  # Basic single stage DDM: V = DPS(1+g)/(r-g)

   Single_DDM_Value <- Div_latest*(1+growth_rate)/(Req - growth_rate)

     return(Single_DDM_Value)

}