Universal Technical Institute - WACC Analysis

Universal Technical Institute (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Universal Technical Institute's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Universal Technical Institute'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 Universal Technical Institute uses a significant proportion of equity capital.