Teck Resources - WACC Analysis

Teck Resources (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Teck Resources's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Teck Resources'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 Teck Resources uses a significant proportion of equity capital.