Hutchison Telecom - WACC Analysis

Hutchison Telecom (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Hutchison Telecom's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Hutchison Telecom'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 Hutchison Telecom uses a significant proportion of equity capital.