Wynn Resorts - WACC Analysis

Wynn Resorts (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Wynn Resorts's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Wynn Resorts'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 Wynn Resorts uses a significant proportion of equity capital.