Amicus Therapeutics - WACC Analysis

Amicus Therapeutics (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Amicus Therapeutics's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Amicus Therapeutics'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 Amicus Therapeutics uses a significant proportion of equity capital.