C.H. Robinson Worldwide - WACC Analysis

C.H. Robinson Worldwide (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for C.H. Robinson Worldwide's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of C.H. Robinson 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 C.H. Robinson Worldwide uses a significant proportion of equity capital.