Anixter International - WACC Analysis

Anixter International (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Anixter International's Analysis

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

WACC Analysis Information

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

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