Las Vegas Sands - WACC Analysis

Las Vegas Sands (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Las Vegas Sands's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Las Vegas Sands'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 Las Vegas Sands uses a significant proportion of equity capital.