USA Truck - WACC Analysis

USA Truck (Weighted Average Cost of Capital (WACC) Analysis)

placeholder_large_analysis.png

Banner%20-%20The%20perfect%20tool%20for%20investors%281%29.gif

Helpful Information for USA Truck's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of USA Truck'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 USA Truck uses a significant proportion of equity capital.