United States Cellular - WACC Analysis

United States Cellular (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for United States Cellular's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of United States Cellular'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 United States Cellular uses a significant proportion of equity capital.