TJX Companies - WACC Analysis

TJX Companies (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for TJX Companies's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of TJX Companies'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 TJX Companies uses a significant proportion of equity capital.