Gerber Scientific - WACC Analysis

Gerber Scientific (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Gerber Scientific's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Gerber Scientific'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 Gerber Scientific uses a significant proportion of equity capital.