Dime Community - WACC Analysis

Dime Community (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Dime Community's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Dime Community'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 Dime Community uses a significant proportion of equity capital.