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Visteon WACC %

:11.02% (As of Today)
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As of today (2022-07-03), Visteon's weighted average cost of capital is 11.02%. Visteon's ROIC % is 4.78% (calculated using TTM income statement data). Visteon earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Visteon WACC % Historical Data

The historical data trend for Visteon'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.

Visteon 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 8.61 10.10 13.80 11.95 12.38

Visteon Quarterly Data
Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22
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 12.49 12.12 11.74 12.38 11.59

Competitive Comparison

For the Auto Parts subindustry, Visteon'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.

   

Visteon WACC % Distribution

For the Vehicles & Parts industry and Consumer Cyclical sector, Visteon's WACC % distribution charts can be found below:

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



Visteon 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, Visteon's market capitalization (E) is $2933.971 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 Mar. 2022, Visteon's latest two-year average Short-Term Debt & Capital Lease Obligation was $32 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $480.5 Mil. The total Book Value of Debt (D) is $512.5 Mil.
a) weight of equity = E / (E + D) = 2933.971 / (2933.971 + 512.5) = 0.8513
b) weight of debt = D / (E + D) = 512.5 / (2933.971 + 512.5) = 0.1487

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 2.88900000%. 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. Visteon's beta is 1.62.
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 = 2.88900000% + 1.62 * 6% = 12.609%

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, Visteon's interest expense (positive number) was $10 Mil. Its total Book Value of Debt (D) is $512.5 Mil.
Cost of Debt = 10 / 512.5 = 1.9512%.

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 less than 0%, and it's set to 0%.

Visteon'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)
=0.8513*12.609%+0.1487*1.9512%*(1 - 0%)
=11.02%

* 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.


Visteon  (NAS:VC) 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, Visteon's weighted average cost of capital is 11.02%. Visteon's ROIC % is 4.78% (calculated using TTM income statement data). Visteon 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

Visteon Business Description

Visteon logo
Industry
Consumer Cyclical » Vehicles & Parts NAICS : 336350 SIC : 3714
Traded in Other Exchanges
Address
One Village Center Drive, Van Buren Township, MI, USA, 48111
Visteon Corp is an automotive supplier. It manufactures electronics products for original equipment vehicle manufacturers including Ford, Nissan, Renault, Mazda, BMW, General Motors, and Honda. The company offers information displays, instrument clusters, head-up displays, infotainment systems, telematics solutions and Smartcore.
Executives
Bergman Naomi M. director 210 E. EARLL DRIVE PHOENIX AZ 85012
Yassini-fard Rouzbeh director C/O YAS CORP. 300 BRICKSTONE SQUARE, 5TH FLOOR ANDOVER MA 01810-1435
Schupfner Markus J officer: Senior Vice President ONE VILLAGE CENTER DRIVE VAN BUREN TOWNSHIP MI 48111
Fleming Abigail S officer: Vice President & CAO VISTEON CORPORATION ONE VILLAGE CENTER DRIVE VAN BUREN TOWNSHIP MI 48111
Barrese James director C/O MARIN SOFTWARE INCORPORATED 123 MISSION STREET, 25TH FLOOR SAN FRANCISCO CA 94105
Maguire Joanne M director 6801 ROCKLEDGE DRIVE BETHESDA MD 20817
Scricco Francis M director C/O AVAYA INC. 211 MOUNT AIRY ROAD BASKING RIDGE NJ 07920
Treadwell David L director 222 S 15TH STREET SUITE 600 N OMAHA NE 68102
Manzo Robert director PARK 80 W PLZ 2 SADDLE BROOK NJ 07663
Jones Jeffrey David director VISTEON CORPORATION ONE VILLAGE CENTER DRIVE VAN BUREN TOWNSHIP MI 48111
Wilson Harry James director VISTEON CORPORATION ONE VILLAGE CENTER DRIVE VAN BUREN TOWNSHIP MI 48111
Trecker Kristin officer: Senior Vice President & CHRO 10000 WEHRLE DRIVE CLARENCE NY 14031
Ribeiro Joao Paulo officer: Senior Vice President VISTEON CORPORATION ONE VILLAGE CENTER DRIVE VAN BUREN TOWNSHIP MI 48111
Bilolikar Sunil K officer: Senior Vice President ONE VILLAGE CENTER DRIVE VAN BUREN TOWNSHIP MI 48111
Lawande Sachin director, officer: CEO & President HARMAN INTERNATIONAL 400 ATLANTIC STREET, SUITE 1500 STAMFORD CT 06901

Visteon Headlines

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