ABM
ABM Industries Inc
Price:  
50.77 
USD
Volume:  
266,719.00
United States | Commercial Services & Supplies
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ABM WACC - Weighted Average Cost of Capital

The WACC of ABM Industries Inc (ABM) is 7.0%.

The Cost of Equity of ABM Industries Inc (ABM) is 8.20%.
The Cost of Debt of ABM Industries Inc (ABM) is 6.20%.

Range Selected
Cost of equity 6.40% - 10.00% 8.20%
Tax rate 28.10% - 33.50% 30.80%
Cost of debt 4.90% - 7.50% 6.20%
WACC 5.5% - 8.4% 7.0%
WACC

ABM WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.56 0.91
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.40% 10.00%
Tax rate 28.10% 33.50%
Debt/Equity ratio 0.44 0.44
Cost of debt 4.90% 7.50%
After-tax WACC 5.5% 8.4%
Selected WACC 7.0%

ABM'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 ABM:

cost_of_equity (8.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.56) + 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.