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Syneos Health WACC %

:9.73% (As of Today)
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As of today (2022-08-08), Syneos Health's weighted average cost of capital is 9.73%. Syneos Health's ROIC % is 4.75% (calculated using TTM income statement data). Syneos Health earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Syneos Health WACC % Historical Data

The historical data trend for Syneos Health's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Syneos Health Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 8.45 7.66 7.71 10.05 10.91

Syneos Health Quarterly Data
Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22
WACC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 11.35 11.30 10.91 10.66 10.07

Competitive Comparison

For the Diagnostics & Research subindustry, Syneos Health's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Syneos Health WACC % Distribution

For the Medical Diagnostics & Research industry and Healthcare sector, Syneos Health's WACC % distribution charts can be found below:

* The bar in red indicates where Syneos Health's WACC % falls into.



Syneos Health WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, Syneos Health's market capitalization (E) is $7027.626 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Jun. 2022, Syneos Health's latest two-year average Short-Term Debt & Capital Lease Obligation was $61.611 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $3085.518 Mil. The total Book Value of Debt (D) is $3147.129 Mil.
a) weight of equity = E / (E + D) = 7027.626 / (7027.626 + 3147.129) = 0.6907
b) weight of debt = D / (E + D) = 3147.129 / (7027.626 + 3147.129) = 0.3093

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 2.75500000%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. Syneos Health's beta is 1.73.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 2.75500000% + 1.73 * 6% = 13.135%

3. Cost of Debt:
GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.
As of Dec. 2021, Syneos Health's interest expense (positive number) was $79.252 Mil. Its total Book Value of Debt (D) is $3147.129 Mil.
Cost of Debt = 79.252 / 3147.129 = 2.5182%.

4. Multiply by one minus Average Tax Rate:
GuruFocus uses the latest two-year average tax rate to do the calculation. The calculated average tax rate is limited to between 0% and 100%. If the calculated average tax rate is higher than 100%, it is set to 100%. If the calculated average tax rate is less than 0%, it is set to 0%.
The latest Two-year Average Tax Rate is 15.415%.

Syneos Health's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.6907*13.135%+0.3093*2.5182%*(1 - 15.415%)
=9.73%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Syneos Health  (NAS:SYNH) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Syneos Health's weighted average cost of capital is 9.73%. Syneos Health's ROIC % is 4.75% (calculated using TTM income statement data). Syneos Health earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.


Related Terms

Syneos Health Business Description

Syneos Health logo
Traded in Other Exchanges
Address
1030 Sync Street, Morrisville, NC, USA, 27560-5468
Syneos is a global contract research and outsourced commercialization organization that provides services to pharmaceutical and biotechnology firms. Its clinical solutions segment offers early- to late-stage clinical trial support that ranges from specialized staffing models to strategic partnerships that oversee nearly all aspects of a drug program, while the company's commercialization solutions includes outsourced sales, consulting, public relations, and advertising services.
Executives
Zulueta Alfonso G director LILLY CORPORATE CENTER INDIANAPOLIS IN 46285
Bodem Barbara W. director C/O DENTSPLY SIRONA INC 13320 BALLANTYNE CORPORATE PLACE CHARLOTTE NC 28277
Brooks Michael Lee officer: See remarks C/O SYNEOS HEALTH, INC. 1030 SYNC STREET MORRISVILLE NC 27560
Wilkes David S. director ONE BAXTER PARKWAY DEERFIELD IL 60015
Connaughton Bernadette director C/O VISTERRA, INC. ONE KENDALL SQUARE, #B3301 CAMBRIDGE MA 02139
Klitgaard William E director 210 CARNEGIE CENTER PRINCETON NJ 08540
Meyers Kenneth F director 275 NORTH FIELD DRIVE LAKE FOREST IL 60045
Monaghan Matthew E. director ONE INVACARE WAY ELYRIA OH 44035
Harty Linda S director MEDTRONIC PLC 710 MEDTRONIC PARKWAY NE, LC-150 MINNEAPOLIS MN 55432
Kralowetz Donna Hildebrand officer: SVP, Chief Accounting Officer C/O SYNEOS HEALTH, INC. 1030 SYNC STREET MORRISVILLE NC 27560
Colvin Paul officer: Pres., Clinical Solutions C/O SYNEOS HEALTH, INC. 1030 SYNC STREET MORRISVILLE NC 27560
Parks Robert officer: EVP, Chief Accounting Officer C/O SYNEOS HEALTH, INC. 1030 SYNC STREET MORRISVILLE NC 27560
Olefson Jonathan officer: General Counsel & Corp Secty C/O SYNEOS HEALTH, INC. 1030 SYNC STREET MORRISVILLE NC 27560
Meggs Jason M. officer: Chief Financial Officer C/O SYNEOS HEALTH, INC. 1030 SYNC STREET MORRISVILLE NC 27560
Gpe Vii Gp S.a.r.l. 10 percent owner CO ADVENT INTERNATIONAL 800 BOYLSTON STREET BOSTON MA 02199

Syneos Health Headlines

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