DETERMINATION OF INTRINSIC VALUE: DIVIDEND DISCOUNT MODEL AND DISCOUNTED CASH FLOW METHODS IN INDONESIA STOCK EXCHANGE

The Covid-19 pandemic which began at the end of 2019, it turned out to be very influential in the significant decline in share prices. It can be seen from the Composite Stock Price Index (IHSG) until mid-March 2020, which has fallen by 37% and the average share price of 669 issuers has decreased by 38%. For investors who have been tested or successful, generally, market conditions like this will be used to buy up shares, but traders or speculators leave the market. Thus, conducting stock valuation, especially determining the current fair value of shares, is very appropriate. Stock assessment in this study will use two Discounted Cash Flow (DCF) models and the Dividend Discount Model (DDM). Furthermore, the two models will analyze which model is the most accurate so that it can help investors choose the right stocks, and the future can be profitable. Based on the results of the study, we can see that by using DDM there are 40 companies (93%) in undervalued positions or only three overvalued companies (7%) while using DCF there are 25 undervalued companies (58%) or 18 overvalued companies (42 %). Henceforth, let us examine the accuracy of the model. We can conclude that DDM is more accurate than DCF because the calculation of the mean absolute pricing error (MAPE) shows that the DDM value is smaller, which is only 46% and with DCF the value is 206%. It happens because with DCF, there is a fair value yield that is much greater than the current stock price, and we can see that condition from overvalued stocks with a large enough DCF value.