AVD WACC - Weighted Average Cost of Capital

The WACC of American Vanguard Corp (AVD) is 11.7%.

The Cost of Equity of American Vanguard Corp (AVD) is 13.80%.

The Cost of Debt of American Vanguard Corp (AVD) is 14.45%.

	Range	Selected
Cost of equity	10.40% - 17.20%	13.80%
Tax rate	16.60% - 25.10%	20.85%
Cost of debt	13.30% - 15.60%	14.45%
WACC	11.0% - 12.5%	11.7%

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	1.41	2.2

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.40%	17.20%

Tax rate	16.60%	25.10%
Debt/Equity ratio	6.13	6.13
Cost of debt	13.30%	15.60%

After-tax WACC	11.0%	12.5%


Selected WACC	11.7%

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 (13.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.41) + 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.