BLBD WACC - Weighted Average Cost of Capital
The WACC of Blue Bird Corp (BLBD) is 8.9%.
| Range | Selected | |
| Cost of equity | 7.9% - 10.6% | 9.25% |
| Tax rate | 24.4% - 29.6% | 27% |
| Cost of debt | 4.5% - 7.4% | 5.95% |
| WACC | 7.6% - 10.2% | 8.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.87 | 1.02 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.9% | 10.6% |
| Tax rate | 24.4% | 29.6% |
| Debt/Equity ratio | 0.07 | 0.07 |
| Cost of debt | 4.5% | 7.4% |
| After-tax WACC | 7.6% | 10.2% |
| Selected WACC | 8.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BLBD | Blue Bird Corp | 0.07 | 0.85 | 0.81 |
| ALG | Alamo Group Inc | 0.08 | 0.77 | 0.72 |
| ASTE | Astec Industries Inc | 0.12 | 1.37 | 1.26 |
| CVGI | Commercial Vehicle Group Inc | 2.63 | 1.01 | 0.34 |
| CYD | China Yuchai International Ltd | 0.77 | 0.63 | 0.4 |
| FSS | Federal Signal Corp | 0.04 | 1.21 | 1.18 |
| MLR | Miller Industries Inc | 0.13 | 1.15 | 1.05 |
| MTW | Manitowoc Company Inc | 0.9 | 1.88 | 1.13 |
| PLOW | Douglas Dynamics Inc | 0.22 | 0.66 | 0.57 |
| SHYF | Shyft Group Inc | 0.3 | 1.12 | 0.92 |
| Low | High | |
| Unlevered beta | 0.77 | 0.97 |
| Relevered beta | 0.81 | 1.03 |
| Adjusted relevered beta | 0.87 | 1.02 |
BLBD'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 BLBD:
cost_of_equity (9.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.87) + 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.