Brinker Intl - WACC Analysis

Brinker Intl (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Brinker Intl's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Brinker Intl'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 Brinker Intl uses a significant proportion of equity capital.