Nash-Finch - WACC Analysis

Nash-Finch (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Nash-Finch's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Nash-Finch'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 Nash-Finch uses a significant proportion of equity capital.