Cinemark Holdings - WACC Analysis

Cinemark Holdings (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Cinemark Holdings's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Cinemark Holdings'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 Cinemark Holdings uses a significant proportion of equity capital.