ALCO WACC - Weighted Average Cost of Capital
The WACC of Alico Inc (ALCO) is 5.6%.
| Range | Selected | |
| Cost of equity | 5.4% - 7.1% | 6.25% |
| Tax rate | 24.8% - 28.0% | 26.4% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 4.8% - 6.5% | 5.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.34 | 0.4 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.4% | 7.1% |
| Tax rate | 24.8% | 28.0% |
| Debt/Equity ratio | 0.39 | 0.39 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 4.8% | 6.5% |
| Selected WACC | 5.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ALCO | Alico Inc | 0.39 | 0.22 | 0.17 |
| GCEH | Global Clean Energy Holdings Inc | 362.65 | 1.91 | 0.01 |
| HERB | Yasheng Group | 0.27 | 1.04 | 0.86 |
| LMNR | Limoneira Co | 0.14 | 0.63 | 0.57 |
| SANW | S&W Seed Co | 4.74 | 1.76 | 0.39 |
| STEV | Stevia Corp | 0.38 | 0.02 | 0.02 |
| SVIN | Scheid Vineyards Inc | 2.42 | 0.18 | 0.07 |
| URBF | Urban Barns Foods Inc | 25639.6 | 0 | 0 |
| YEWB | Yew Bio-Pharm Group Inc | 868.46 | 1.82 | 0 |
| Low | High | |
| Unlevered beta | 0.03 | 0.15 |
| Relevered beta | 0.01 | 0.1 |
| Adjusted relevered beta | 0.34 | 0.4 |
ALCO'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 ALCO:
cost_of_equity (6.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.34) + 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.