Stable Growth Theory is an economic concept that suggests a company can maintain a consistent growth rate over time. This theory assumes that a firm will grow at a steady pace, which is sustainable and predictable, allowing investors to estimate future earnings and dividends. It is often used in financial modeling to assess the long-term value of a company. The theory is particularly relevant for mature companies in stable industries, where growth rates are less volatile. By applying the Gordon Growth Model, investors can calculate the present value of expected future cash flows, making it easier to evaluate investment opportunities based on stable growth projections.