AVD
American Vanguard Corp
Price:  
3.70 
USD
Volume:  
451,128.00
United States | Chemicals
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AVD WACC - Weighted Average Cost of Capital

The WACC of American Vanguard Corp (AVD) is 7.1%.

The Cost of Equity of American Vanguard Corp (AVD) is 7.10%.
The Cost of Debt of American Vanguard Corp (AVD) is 9.10%.

Range Selected
Cost of equity 5.70% - 8.50% 7.10%
Tax rate 21.10% - 25.10% 23.10%
Cost of debt 7.00% - 11.20% 9.10%
WACC 5.6% - 8.5% 7.1%
WACC

AVD WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.4 0.66
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.70% 8.50%
Tax rate 21.10% 25.10%
Debt/Equity ratio 0.95 0.95
Cost of debt 7.00% 11.20%
After-tax WACC 5.6% 8.5%
Selected WACC 7.1%

AVD'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 AVD:

cost_of_equity (7.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.4) + 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.