Lender Processing Srvs - WACC Analysis

Lender Processing Srvs (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Lender Processing Srvs's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Lender Processing Srvs'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 Lender Processing Srvs uses a significant proportion of equity capital.