Genworth Financial - WACC Analysis

Genworth Financial (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Genworth Financial's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Genworth Financial'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 Genworth Financial uses a significant proportion of equity capital.