BGFV
Big 5 Sporting Goods Corp
Price:  
1.42 
USD
Volume:  
116,939.00
United States | Specialty Retail
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BGFV WACC - Weighted Average Cost of Capital

The WACC of Big 5 Sporting Goods Corp (BGFV) is 8.2%.

The Cost of Equity of Big 5 Sporting Goods Corp (BGFV) is 10.05%.
The Cost of Debt of Big 5 Sporting Goods Corp (BGFV) is 7.85%.

Range Selected
Cost of equity 8.60% - 11.50% 10.05%
Tax rate 23.40% - 24.40% 23.90%
Cost of debt 7.00% - 8.70% 7.85%
WACC 7.2% - 9.3% 8.2%
WACC

BGFV WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.03 1.18
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.60% 11.50%
Tax rate 23.40% 24.40%
Debt/Equity ratio 0.8 0.8
Cost of debt 7.00% 8.70%
After-tax WACC 7.2% 9.3%
Selected WACC 8.2%

BGFV'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 BGFV:

cost_of_equity (10.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.03) + 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.