The WACC of B&G Foods Inc (BGS) is 7.6%.
Range | Selected | |
Cost of equity | 9.1% - 17.4% | 13.25% |
Tax rate | 24.9% - 26.3% | 25.6% |
Cost of debt | 5.6% - 12.4% | 9% |
WACC | 4.9% - 10.3% | 7.6% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 1.13 | 2.24 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.1% | 17.4% |
Tax rate | 24.9% | 26.3% |
Debt/Equity ratio | 5.77 | 5.77 |
Cost of debt | 5.6% | 12.4% |
After-tax WACC | 4.9% | 10.3% |
Selected WACC | 7.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
BGS | B&G Foods Inc | 5.77 | -0.21 | -0.04 |
HAIN | Hain Celestial Group Inc | 5.53 | 0.3 | 0.06 |
LANC | Lancaster Colony Corp | 0 | 0.1 | 0.1 |
LAS.A.TO | Lassonde Industries Inc | 0.33 | 0.68 | 0.55 |
LNDC | Landec Corp | 0.39 | 1.07 | 0.83 |
MFI.TO | Maple Leaf Foods Inc | 0.54 | 0.74 | 0.53 |
PLIN | China Xiangtai Food Co Ltd | 0.02 | 1.1 | 1.08 |
SENEA | Seneca Foods Corp | 0.56 | 0.4 | 0.28 |
SMPL | Simply Good Foods Co | 0.12 | 0.62 | 0.56 |
TWNK | Hostess Brands Inc | 0.23 | 0.17 | 0.14 |
Low | High | |
Unlevered beta | 0.23 | 0.54 |
Relevered beta | 1.19 | 2.85 |
Adjusted relevered beta | 1.13 | 2.24 |
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 B&G:
cost_of_equity (13.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.13) + 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.