Fidelity National Info - WACC Analysis

Fidelity National Info (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Fidelity National Info's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Fidelity National Info'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 Fidelity National Info uses a significant proportion of equity capital.