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


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.