Globecomm Systems - WACC Analysis

Globecomm Systems (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Globecomm Systems's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Globecomm Systems'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 Globecomm Systems uses a significant proportion of equity capital.