Seacoast Banking - WACC Analysis

Seacoast Banking (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Seacoast Banking's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Seacoast Banking'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 Seacoast Banking uses a significant proportion of equity capital.