DRDGOLD Limited - WACC Analysis

DRDGOLD Limited (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for DRDGOLD Limited's Analysis

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

WACC Analysis Information

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

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