Orion Marine - WACC Analysis

Orion Marine (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Orion Marine's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Orion Marine'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 Orion Marine uses a significant proportion of equity capital.