Measurement Specialties - WACC Analysis

Measurement Specialties (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Measurement Specialties's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Measurement Specialties'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 Measurement Specialties uses a significant proportion of equity capital.