Argo Group - WACC Analysis

Argo Group (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Argo Group's Analysis

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

WACC Analysis Information

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

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