Expeditors Intl of Washington - WACC Analysis

Expeditors Intl of Washington (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Expeditors Intl of Washington's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Expeditors Intl of Washington'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 Expeditors Intl of Washington uses a significant proportion of equity capital.