Bilbao Viscaya Argentaria - WACC Analysis

Bilbao Viscaya Argentaria (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Bilbao Viscaya Argentaria's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Bilbao Viscaya Argentaria'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 Bilbao Viscaya Argentaria uses a significant proportion of equity capital.