TranS1 - WACC Analysis

TranS1 (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for TranS1's Analysis

What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine TranS1'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 TranS1. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in TranS1 before they make value investing decisions. This WACC analysis is used in TranS1's discounted cash flow (DCF) valuation and see how the WACC calculation affect's TranS1's company valuation.

WACC Analysis Information

1. The WACC (discount rate) calculation for TranS1 uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for TranS1 over the long term. If there are any short-term differences between the industry WACC and TranS1's WACC (discount rate), then TranS1 is more likely to revert to the industry WACC (discount rate) over the long term.

2. The WACC calculation uses the higher of TranS1'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 TranS1 uses a significant proportion of equity capital.