Public Storage - WACC Analysis

Public Storage (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Public Storage's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Public Storage'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 Public Storage uses a significant proportion of equity capital.