ABG
Asbury Automotive Group Inc
Price:  
220.71 
USD
Volume:  
121,833.00
United States | Specialty Retail
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ABG WACC - Weighted Average Cost of Capital

The WACC of Asbury Automotive Group Inc (ABG) is 6.4%.

The Cost of Equity of Asbury Automotive Group Inc (ABG) is 9.45%.
The Cost of Debt of Asbury Automotive Group Inc (ABG) is 5.00%.

Range Selected
Cost of equity 8.10% - 10.80% 9.45%
Tax rate 24.70% - 24.80% 24.75%
Cost of debt 4.40% - 5.60% 5.00%
WACC 5.5% - 7.3% 6.4%
WACC

ABG WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.91 1.05
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.10% 10.80%
Tax rate 24.70% 24.80%
Debt/Equity ratio 1.16 1.16
Cost of debt 4.40% 5.60%
After-tax WACC 5.5% 7.3%
Selected WACC 6.4%

ABG's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for ABG:

cost_of_equity (9.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.91) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.