John B. Sanfilippo & Son - WACC Analysis

John B. Sanfilippo & Son (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for John B. Sanfilippo & Son's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of John B. Sanfilippo & Son'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 John B. Sanfilippo & Son uses a significant proportion of equity capital.