Web.com Group - WACC Analysis

Web.com Group (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Web.com Group's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Web.com 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 Web.com Group uses a significant proportion of equity capital.