Atlas Air Worldwide - WACC Analysis

Atlas Air Worldwide (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Atlas Air Worldwide's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Atlas Air Worldwide'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 Atlas Air Worldwide uses a significant proportion of equity capital.