ConAgra Foods - WACC Analysis

ConAgra Foods (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for ConAgra Foods's Analysis

What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine ConAgra Foods's investment risk. WACC Formula = Cost of Equity (CAPM) * Common Equity + (Cost of Debt) * Total Debt. The result of this calculation is an essential input for the discounted cash flow (DCF) analysis for ConAgra Foods. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in ConAgra Foods before they make value investing decisions. This WACC analysis is used in ConAgra Foods's discounted cash flow (DCF) valuation and see how the WACC calculation affect's ConAgra Foods's company valuation.

WACC Analysis Information

1. The WACC (discount rate) calculation for ConAgra Foods uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for ConAgra Foods over the long term. If there are any short-term differences between the industry WACC and ConAgra Foods's WACC (discount rate), then ConAgra Foods is more likely to revert to the industry WACC (discount rate) over the long term.

2. The WACC calculation uses the higher of ConAgra Foods's WACC or the risk free rate, because no investment can have a cost of capital that is better than risk free. This situation may occur if the beta is negative and ConAgra Foods uses a significant proportion of equity capital.