Juniper Networks - WACC Analysis

Juniper Networks (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Juniper Networks's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Juniper Networks'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 Juniper Networks uses a significant proportion of equity capital.