Syms Corp - WACC Analysis

Syms Corp (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Syms Corp's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Syms Corp'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 Syms Corp uses a significant proportion of equity capital.