Horsehead Holding - WACC Analysis

Horsehead Holding (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Horsehead Holding's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Horsehead Holding'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 Horsehead Holding uses a significant proportion of equity capital.