Weighted average cost of capital (WACC) is a basic financial concept and formula that is frequently used in corporate finance and sometimes used in equity and debt valuation, although understanding what it is and its limitations is usually more beneficial to the external analyst trying to understand how a company thinks about itself and its future.
Garmin (GRMN) recently soared 17% in a single day following expressive earnings and revenue numbers, with a 4% revenue growth rate ahead of market expectations helping the company’s EPS beat by 22 cents at $1. The new earnings and stock jump brought GRMN shares toa. 23.7 forward P/E ratio.
Perhaps the most high-profile corner of the financial industry is equity analysis. Not because it’s the most exciting, most difficult, or most lucrative, but because it is easiest understood outside of the industry.
One of the quiet but extremely problematic developments in finance over the last decade has been a small factor in discounted cash flow model valuations that has been so impactful that it’s led many in the industry to abandon this form of valuation entirely in favor of alternatives.
December 2018 was the worst December on record for the S&P 500. This is an amazing factoid on its face, but what is even more astounding about the month that started the first bear market in a decade is that no one really knows what caused it.
It’s been many years since Arturo Estrella made a startling discovery that has remained true even after he published his research: inverted yield curves predict recessions. But why?