AMN Healthcare (Weighted Average Cost of Capital (WACC) Analysis)
Helpful Information for AMN Healthcare's Analysis
What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine AMN Healthcare'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 AMN Healthcare. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in AMN Healthcare before they make value investing decisions. This WACC analysis is used in AMN Healthcare's discounted cash flow (DCF) valuation and see how the WACC calculation affect's AMN Healthcare's company valuation.
WACC Analysis Information
1. The WACC (discount rate) calculation for AMN Healthcare uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for AMN Healthcare over the long term. If there are any short-term differences between the industry WACC and AMN Healthcare's WACC (discount rate), then AMN Healthcare is more likely to revert to the industry WACC (discount rate) over the long term.
2. The WACC calculation uses the higher of AMN Healthcare'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 AMN Healthcare uses a significant proportion of equity capital.