Genco Shipping - WACC Analysis

Genco Shipping (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Genco Shipping's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Genco Shipping'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 Genco Shipping uses a significant proportion of equity capital.