United Security - WACC Analysis

United Security (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for United Security's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of United Security'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 United Security uses a significant proportion of equity capital.