BZH
Beazer Homes USA Inc
Price:  
21.25 
USD
Volume:  
933,984.00
United States | Household Durables
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Beazer WACC - Weighted Average Cost of Capital

The WACC of Beazer Homes USA Inc (BZH) is 7.4%.

The Cost of Equity of Beazer Homes USA Inc (BZH) is 8.50%.
The Cost of Debt of Beazer Homes USA Inc (BZH) is 8.00%.

Range Selected
Cost of equity 7.20% - 9.80% 8.50%
Tax rate 14.20% - 16.80% 15.50%
Cost of debt 6.90% - 9.10% 8.00%
WACC 6.4% - 8.4% 7.4%
WACC

Beazer WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.72 0.87
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.20% 9.80%
Tax rate 14.20% 16.80%
Debt/Equity ratio 1.55 1.55
Cost of debt 6.90% 9.10%
After-tax WACC 6.4% 8.4%
Selected WACC 7.4%

Beazer'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 Beazer:

cost_of_equity (8.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.72) + 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.