Textainer Group - WACC Analysis

Textainer Group (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Textainer Group's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Textainer Group'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 Textainer Group uses a significant proportion of equity capital.