Ingles Markets - WACC Analysis

Ingles Markets (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Ingles Markets's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Ingles Markets'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 Ingles Markets uses a significant proportion of equity capital.