BBQ
BBQ Holdings Inc
Price:  
17.24 
USD
Volume:  
18,713.00
United States | Hotels, Restaurants & Leisure
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BBQ WACC - Weighted Average Cost of Capital

The WACC of BBQ Holdings Inc (BBQ) is 8.1%.

The Cost of Equity of BBQ Holdings Inc (BBQ) is 8.50%.
The Cost of Debt of BBQ Holdings Inc (BBQ) is 5.55%.

Range Selected
Cost of equity 7.40% - 9.60% 8.50%
Tax rate 26.60% - 36.30% 31.45%
Cost of debt 4.50% - 6.60% 5.55%
WACC 7.1% - 9.2% 8.1%
WACC

BBQ WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.77 0.84
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.40% 9.60%
Tax rate 26.60% 36.30%
Debt/Equity ratio 0.08 0.08
Cost of debt 4.50% 6.60%
After-tax WACC 7.1% 9.2%
Selected WACC 8.1%

BBQ'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 BBQ:

cost_of_equity (8.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.77) + 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.