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Loma Negra Cia Industria Argentina WACC %

:10.29% As of Today
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As of today (2021-09-20), Loma Negra Cia Industria Argentina's weighted average cost of capital is 10.29%. Loma Negra Cia Industria Argentina's ROIC % is 8.91% (calculated using TTM income statement data). Loma Negra Cia Industria Argentina earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Loma Negra Cia Industria Argentina WACC % Historical Data

The historical data trend for Loma Negra Cia Industria Argentina'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.

Loma Negra Cia Industria Argentina Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
WACC %
Premium Member Only Premium Member Only - 9.05 8.33 10.54 8.88

Loma Negra Cia Industria Argentina Quarterly Data
Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21
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 10.49 10.18 8.88 9.53 8.80

Competitive Comparison

For the Building Materials industry, Loma Negra Cia Industria Argentina'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.

   

Loma Negra Cia Industria Argentina WACC % Distribution

For the Building Materials industry and Basic Materials sector, Loma Negra Cia Industria Argentina's WACC % distribution charts can be found below:

* The bar in red indicates where Loma Negra Cia Industria Argentina's WACC % falls into.



Loma Negra Cia Industria Argentina 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, Loma Negra Cia Industria Argentina's market capitalization (E) is $845.199 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. 2021, Loma Negra Cia Industria Argentina's latest two-year average Short-Term Debt & Capital Lease Obligation was $88.418848945068 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $64.324668160232 Mil. The total Book Value of Debt (D) is $152.7435171053 Mil.
a) weight of equity = E / (E + D) = 845.199 / (845.199 + 152.7435171053) = 0.8469
b) weight of debt = D / (E + D) = 152.7435171053 / (845.199 + 152.7435171053) = 0.1531

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 1.37000000%. 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. Loma Negra Cia Industria Argentina's beta is 1.61.
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 = 1.37000000% + 1.61 * 6% = 11.03%

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. 2020, Loma Negra Cia Industria Argentina's interest expense (positive number) was $13.484234952724 Mil. Its total Book Value of Debt (D) is $152.7435171053 Mil.
Cost of Debt = 13.484234952724 / 152.7435171053 = 8.828%.

4. Multiply by one minus Average Tax Rate:
GuruFocus uses the latest two-year average tax rate to do the calculation.
The latest Two-year Average Tax Rate is 29.745%.

Loma Negra Cia Industria Argentina'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)
=0.8469*11.03%+0.1531*8.828%*(1 - 29.745%)
=10.29%

* 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.


Loma Negra Cia Industria Argentina  (NYSE:LOMA) 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, Loma Negra Cia Industria Argentina's weighted average cost of capital is 10.29%. Loma Negra Cia Industria Argentina's ROIC % is 8.91% (calculated using TTM income statement data). Loma Negra Cia Industria Argentina 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

Loma Negra Cia Industria Argentina Business Description

Loma Negra Cia Industria Argentina logo
Industry
Basic Materials » Building Materials NAICS : 327310 SIC : 3241
Traded in Other Exchanges
Address
Boulevard Cecilia Grierson 355, Piso 4, 4th Floor, Buenos Aires, ARG, C1107CPG
Loma Negra Cia Industria Argentina SA is a cement producer in Argentina. The company operates in five segments: Cement, masonry cement, and lime; Concrete; Rail services; Aggregates; and Others. The majority of its revenue comes from Cement, masonry cement, and lime segment.

Loma Negra Cia Industria Argentina Headlines

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