PNM Resources (Weighted Average Cost of Capital (WACC) Analysis)
 Improve your investment analysis with by seeing the PNM Resources's Discounted Cash Flow analysis, PNM Resources's Warren Buffet analysis, and PNM Resources's Comparable Multiple analysis.  Helpful Information for PNM Resources's AnalysisWhat is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine PNM Resources'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 PNM Resources. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in PNM Resources before they make value investing decisions. This WACC analysis is used in PNM Resources's discounted cash flow (DCF) valuation and see how the WACC calculation affect's PNM Resources's company valuation. |
WACC Analysis Information1. The WACC (discount rate) calculation for PNM Resources uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for PNM Resources over the long term. If there are any short-term differences between the industry WACC and PNM Resources's WACC (discount rate), then PNM Resources is more likely to revert to the industry WACC (discount rate) over the long term. 2. The WACC calculation uses the higher of PNM Resources'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 PNM Resources uses a significant proportion of equity capital. |
