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can you tell me why dividend valuation model give not absolute result?
if it is realistic then why we check that share price is under value or over value?The dividend valuation model depends on knowing the stream of future dividends and can only deal with constant or zero dividend growth. Different assumptions about dividends will result in different calculated share values. It would probably be possible to work back from an actual share price to find what assumptions about dividends that implied, but that’s a bit of a circular argument.
remember, there is no need to use the dividend valuation model to value quoted companies’ shares because they have a definitive actual market value. If you are using the dividend valuation model to value unquoted shares, then you have to put in the best assumptions you have and apply the theory – but then there is no actual market value to compare the answer to.
HTH
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