Caseys General Stores - WACC Analysis

Caseys General Stores (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Caseys General Stores's Analysis

What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Caseys General Stores'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 Caseys General Stores. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Caseys General Stores before they make value investing decisions. This WACC analysis is used in Caseys General Stores's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Caseys General Stores's company valuation.

WACC Analysis Information

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

2. The WACC calculation uses the higher of Caseys General Stores'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 Caseys General Stores uses a significant proportion of equity capital.