BH
Biglari Holdings Inc
Price:  
237.11 
USD
Volume:  
31,186.00
United States | Hotels, Restaurants & Leisure
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BH WACC - Weighted Average Cost of Capital

The WACC of Biglari Holdings Inc (BH) is 6.6%.

The Cost of Equity of Biglari Holdings Inc (BH) is 7.90%.
The Cost of Debt of Biglari Holdings Inc (BH) is 5.00%.

Range Selected
Cost of equity 4.80% - 11.00% 7.90%
Tax rate 21.70% - 27.40% 24.55%
Cost of debt 5.00% - 5.00% 5.00%
WACC 4.5% - 8.7% 6.6%
WACC

BH WACC calculation

Category Low High
Long-term bond rate 1.3% 1.8%
Equity market risk premium 4.7% 5.7%
Adjusted beta 0.75 1.52
Additional risk adjustments 0.0% 0.5%
Cost of equity 4.80% 11.00%
Tax rate 21.70% 27.40%
Debt/Equity ratio 0.45 0.45
Cost of debt 5.00% 5.00%
After-tax WACC 4.5% 8.7%
Selected WACC 6.6%

BH'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 BH:

cost_of_equity (7.90%) = risk_free_rate (1.55%) + equity_risk_premium (5.20%) * adjusted_beta (0.75) + 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.