Integrated Electrical Srvs - WACC Analysis

Integrated Electrical Srvs (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Integrated Electrical Srvs's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Integrated Electrical Srvs'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 Integrated Electrical Srvs uses a significant proportion of equity capital.