Heico Corp - WACC Analysis

Heico Corp (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Heico Corp's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Heico Corp'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 Heico Corp uses a significant proportion of equity capital.