Orbital Sciences - WACC Analysis

Orbital Sciences (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Orbital Sciences's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Orbital Sciences'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 Orbital Sciences uses a significant proportion of equity capital.