Hackett Group - WACC Analysis

Hackett Group (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Hackett Group's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Hackett Group'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 Hackett Group uses a significant proportion of equity capital.