Texas Capital Banc - WACC Analysis

Texas Capital Banc (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Texas Capital Banc's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Texas Capital Banc'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 Texas Capital Banc uses a significant proportion of equity capital.