Veolia Environnement - WACC Analysis

Veolia Environnement (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Veolia Environnement's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Veolia Environnement'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 Veolia Environnement uses a significant proportion of equity capital.