Grupo Financiero Galicia - WACC Analysis

Grupo Financiero Galicia (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Grupo Financiero Galicia's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Grupo Financiero Galicia'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 Grupo Financiero Galicia uses a significant proportion of equity capital.