USANA Health Sciences - WACC Analysis

USANA Health Sciences (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for USANA Health Sciences's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of USANA Health Sciences'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 USANA Health Sciences uses a significant proportion of equity capital.