CNF - WACC Analysis

CNF (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for CNF's Analysis

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

WACC Analysis Information

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

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