Employers Holdings (Weighted Average Cost of Capital (WACC) Analysis)
Improve your investment analysis with by seeing the Employers Holdings's Discounted Cash Flow analysis, Employers Holdings's Warren Buffet analysis, and Employers Holdings's Comparable Multiple analysis.
Helpful Information for Employers Holdings's Analysis
What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Employers Holdings'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 Employers Holdings. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Employers Holdings before they make value investing decisions. This WACC analysis is used in Employers Holdings's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Employers Holdings's company valuation.
WACC Analysis Information
1. The WACC (discount rate) calculation for Employers Holdings uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Employers Holdings over the long term. If there are any short-term differences between the industry WACC and Employers Holdings's WACC (discount rate), then Employers Holdings is more likely to revert to the industry WACC (discount rate) over the long term.
2. The WACC calculation uses the higher of Employers Holdings'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 Employers Holdings uses a significant proportion of equity capital.