99 Cents Only Stores - WACC Analysis

99 Cents Only Stores (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for 99 Cents Only Stores's Analysis

What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine 99 Cents Only Stores'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 99 Cents Only Stores. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in 99 Cents Only Stores before they make value investing decisions. This WACC analysis is used in 99 Cents Only Stores's discounted cash flow (DCF) valuation and see how the WACC calculation affect's 99 Cents Only Stores's company valuation.

WACC Analysis Information

1. The WACC (discount rate) calculation for 99 Cents Only Stores uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for 99 Cents Only Stores over the long term. If there are any short-term differences between the industry WACC and 99 Cents Only Stores's WACC (discount rate), then 99 Cents Only Stores is more likely to revert to the industry WACC (discount rate) over the long term.

2. The WACC calculation uses the higher of 99 Cents Only Stores'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 99 Cents Only Stores uses a significant proportion of equity capital.