Centerstate Banks of Florida - WACC Analysis

Centerstate Banks of Florida (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Centerstate Banks of Florida's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Centerstate Banks of Florida'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 Centerstate Banks of Florida uses a significant proportion of equity capital.