CRH PLC - WACC Analysis

CRH PLC (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for CRH PLC's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of CRH PLC'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 CRH PLC uses a significant proportion of equity capital.