AMWD WACC - Weighted Average Cost of Capital
The WACC of American Woodmark Corp (AMWD) is 8.3%.
| Range | Selected | |
| Cost of equity | 9.2% - 12.3% | 10.75% |
| Tax rate | 23.6% - 23.8% | 23.7% |
| Cost of debt | 4.0% - 4.6% | 4.3% |
| WACC | 7.2% - 9.4% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.16 | 1.32 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.2% | 12.3% |
| Tax rate | 23.6% | 23.8% |
| Debt/Equity ratio | 0.47 | 0.47 |
| Cost of debt | 4.0% | 4.6% |
| After-tax WACC | 7.2% | 9.4% |
| Selected WACC | 8.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| AMWD | American Woodmark Corp | 0.47 | 1.12 | 0.82 |
| AAON | Aaon Inc | 0.03 | 1.62 | 1.59 |
| APOG | Apogee Enterprises Inc | 0.31 | 0.87 | 0.7 |
| CNR | Core Natural Resources, Inc. | 0.06 | 1.54 | 1.48 |
| DOOR | Masonite International Corp | 0.38 | 1.54 | 1.19 |
| GFF | Griffon Corp | 0.45 | 1.06 | 0.79 |
| NX | Quanex Building Products Corp | 0.84 | 0.83 | 0.51 |
| PGTI | PGT Innovations Inc | 0.25 | 1.15 | 0.96 |
| TGEN | Tecogen Inc | 0.01 | 1.37 | 1.36 |
| TREX | Trex Company Inc | 0.03 | 1.04 | 1.01 |
| Low | High | |
| Unlevered beta | 0.91 | 1.08 |
| Relevered beta | 1.24 | 1.48 |
| Adjusted relevered beta | 1.16 | 1.32 |
AMWD'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 AMWD:
cost_of_equity (10.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.16) + 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.