Avnet WACC - Weighted Average Cost of Capital
The WACC of Avnet Inc (AVT) is 8.7%.
| Range | Selected | |
| Cost of equity | 8.3% - 11.0% | 9.65% |
| Tax rate | 19.4% - 21.3% | 20.35% |
| Cost of debt | 7.5% - 11.0% | 9.25% |
| WACC | 7.4% - 10.0% | 8.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.97 | 1.1 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.3% | 11.0% |
| Tax rate | 19.4% | 21.3% |
| Debt/Equity ratio | 0.67 | 0.67 |
| Cost of debt | 7.5% | 11.0% |
| After-tax WACC | 7.4% | 10.0% |
| Selected WACC | 8.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| AVT | Avnet Inc | 0.67 | 0.98 | 0.64 |
| AEY | ADDvantage Technologies Group Inc | 3.52 | 0.99 | 0.26 |
| ARW | Arrow Electronics Inc | 0.51 | 0.92 | 0.66 |
| CDW | CDW Corp | 0.24 | 1.13 | 0.95 |
| EACO | EACO Corp | 0.02 | -0.13 | -0.12 |
| NSIT | Insight Enterprises Inc | 0.21 | 1.19 | 1.03 |
| SCSC | Scansource Inc | 0.16 | 1.2 | 1.07 |
| SNX | SYNNEX Corp | 0.38 | 1.15 | 0.88 |
| ASB.WA | ASBISc Enterprises PLC | 0.69 | 0.94 | 0.61 |
| PRT.MI | Esprinet SpA | 1.31 | 0.8 | 0.39 |
| Low | High | |
| Unlevered beta | 0.63 | 0.75 |
| Relevered beta | 0.96 | 1.15 |
| Adjusted relevered beta | 0.97 | 1.1 |
Avnet'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 Avnet:
cost_of_equity (9.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.97) + 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.