Clean Harbors - WACC Analysis

Clean Harbors (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Clean Harbors's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Clean Harbors'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 Clean Harbors uses a significant proportion of equity capital.