National Fuel Gas - WACC Analysis

National Fuel Gas (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for National Fuel Gas's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of National Fuel Gas'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 National Fuel Gas uses a significant proportion of equity capital.