Horace Mann Educators - WACC Analysis

Horace Mann Educators (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Horace Mann Educators's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Horace Mann Educators'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 Horace Mann Educators uses a significant proportion of equity capital.