Constant Contact - WACC Analysis

Constant Contact (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Constant Contact's Analysis

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

WACC Analysis Information

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

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