AVD WACC - Weighted Average Cost of Capital
The WACC of American Vanguard Corp (AVD) is 7.1%.
| Range | Selected | |
| Cost of equity | 5.8% - 8.6% | 7.2% |
| Tax rate | 21.1% - 25.1% | 23.1% |
| Cost of debt | 7.0% - 11.2% | 9.1% |
| WACC | 5.6% - 8.5% | 7.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.41 | 0.67 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.8% | 8.6% |
| Tax rate | 21.1% | 25.1% |
| Debt/Equity ratio | 1.02 | 1.02 |
| Cost of debt | 7.0% | 11.2% |
| After-tax WACC | 5.6% | 8.5% |
| Selected WACC | 7.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| AVD | American Vanguard Corp | 1.02 | 1.07 | 0.6 |
| AGFS | AgroFresh Solutions Inc | 1.6 | 1.06 | 0.48 |
| CGA | China Green Agriculture Inc | 0.62 | -0.03 | -0.02 |
| CHBU | China Agri-Business Inc | 0.04 | 1.16 | 1.13 |
| IFOS.V | Itafos | 0.27 | 0.07 | 0.06 |
| MBII | Marrone Bio Innovations Inc | 0.18 | 0.36 | 0.32 |
| NZP.V | Chatham Rock Phosphate Ltd | 0.01 | -0.69 | -0.68 |
| TREC | Trecora Resources | 0.18 | 0.3 | 0.26 |
| UAN | CVR Partners LP | 0.6 | 0.6 | 0.41 |
| ENGB.BR | Rosier SA | 3.22 | 0.14 | 0.04 |
| Low | High | |
| Unlevered beta | 0.18 | 0.36 |
| Relevered beta | 0.12 | 0.51 |
| Adjusted relevered beta | 0.41 | 0.67 |
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 (7.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.41) + 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.