Helmerich & Payne - WACC Analysis

Helmerich & Payne (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Helmerich & Payne's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Helmerich & Payne'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 Helmerich & Payne uses a significant proportion of equity capital.