Helix Energy Solutions - WACC Analysis

Helix Energy Solutions (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Helix Energy Solutions's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Helix Energy Solutions'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 Helix Energy Solutions uses a significant proportion of equity capital.