Tanger Factory Outlet - WACC Analysis

Tanger Factory Outlet (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Tanger Factory Outlet's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Tanger Factory Outlet'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 Tanger Factory Outlet uses a significant proportion of equity capital.