WAC vs FAR Which Is a Better Investment?

WAC (Weighted Average Cost of Capital) and FAR (Free Cash Flow to Asset Ratio) are two key financial metrics used by investors to evaluate a company's performance and financial health. WAC measures the average cost a company pays for its capital, taking into account both debt and equity, while FAR measures the company's ability to generate cash from its assets. Understanding the differences and implications of these two metrics can help investors make more informed decisions when analyzing and comparing stocks in the market.

WAC or FAR?

When comparing WAC and FAR, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between WAC and FAR.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. WAC has a dividend yield of -%, while FAR has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. WAC reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, FAR reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with WAC P/E ratio at 16.24 and FAR's P/E ratio at 0.73. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. WAC P/B ratio is 0.52 while FAR's P/B ratio is 0.66.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, WAC has seen a 5-year revenue growth of 0.11%, while FAR's is 0.00%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with WAC's ROE at 3.62% and FAR's ROE at 168.88%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are HK$0.05 for WAC and $0.31 for FAR. Over the past year, WAC's prices ranged from HK$0.04 to HK$0.39, with a yearly change of 983.33%. FAR's prices fluctuated between $0.20 and $0.37, with a yearly change of 89.45%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.