Usually, we use the H-Model if the short term growth rate is higher than then long term sustainable growth rate.
Can the H-Model still work in the reverse? i.e. short term growth is LOWER than long term sustainable growth
Thoughts?
You are overthinking things
^^^
Well, in my scenario, the most appropriate is the two stage DDM. However, it’s not covered in the L3 book… and I don’t remember my L1 stuff anymore.
Further thoughts?
Yes it can. S is for short term (not Super growth), L is for long term .
Pretty unlikely situation considering most firms do not grow at a high rate into perpituity.
It’s relative. For eg, short term can be 0.5% for 4 years, then 2% afterward . Or a decline followed by growth.