Addus WACC - Weighted Average Cost of Capital
The WACC of Addus Homecare Corp (ADUS) is 8.2%.
| Range | Selected | |
| Cost of equity | 6.7% - 10.7% | 8.7% |
| Tax rate | 23.4% - 24.2% | 23.8% |
| Cost of debt | 4.5% - 4.8% | 4.65% |
| WACC | 6.3% - 10.0% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.61 | 1.04 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.7% | 10.7% |
| Tax rate | 23.4% | 24.2% |
| Debt/Equity ratio | 0.11 | 0.11 |
| Cost of debt | 4.5% | 4.8% |
| After-tax WACC | 6.3% | 10.0% |
| Selected WACC | 8.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ADUS | Addus Homecare Corp | 0.11 | 0.29 | 0.27 |
| AKU.TO | Akumin Inc | 1.94 | 0.95 | 0.38 |
| AMEH | Apollo Medical Holdings Inc | 0.11 | 1.21 | 1.12 |
| BDSX | Biodesix, Inc. | 0.81 | 0.29 | 0.18 |
| DRWN | Quantum Medical Transport Inc | 6845.17 | 0 | 0 |
| ENZ | Enzo Biochem Inc | 0.01 | 1.9 | 1.88 |
| PTQ.V | Protech Home Medical Corp | 0.15 | 1.94 | 1.74 |
| RDNT | RadNet Inc | 0.24 | 1.06 | 0.89 |
| VMD.TO | Viemed Healthcare Inc | 0 | 0.46 | 0.46 |
| WELL.TO | WELL Health Technologies Corp | 0.4 | 1.86 | 1.43 |
| Low | High | |
| Unlevered beta | 0.43 | 0.98 |
| Relevered beta | 0.42 | 1.06 |
| Adjusted relevered beta | 0.61 | 1.04 |
Addus'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 Addus:
cost_of_equity (8.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.61) + 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.