CAI WACC - Weighted Average Cost of Capital
The WACC of CAI International Inc (CAI) is 5.8%.
| Range | Selected | |
| Cost of equity | 7.5% - 10.6% | 9.05% |
| Tax rate | 7.1% - 12.1% | 9.6% |
| Cost of debt | 4.0% - 4.9% | 4.45% |
| WACC | 5.1% - 6.6% | 5.8% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 1.02 | 1.23 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.5% | 10.6% |
| Tax rate | 7.1% | 12.1% |
| Debt/Equity ratio | 1.78 | 1.78 |
| Cost of debt | 4.0% | 4.9% |
| After-tax WACC | 5.1% | 6.6% |
| Selected WACC | 5.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CAI | CAI International Inc | 1.78 | 1.38 | 0.52 |
| AL | Air Lease Corp | 3.37 | 1.08 | 0.26 |
| FLY | FLY Leasing Ltd | 3.74 | 1.48 | 0.33 |
| FTAI | Fortress Transportation and Infrastructure Investors LLC | 0.31 | 1.12 | 0.87 |
| GATX | GATX Corp | 1.58 | 0.87 | 0.35 |
| HEES | H&E Equipment Services Inc | 0.43 | 1.59 | 1.14 |
| TGH | Textainer Group Holdings Ltd | 2.41 | -0.37 | -0.11 |
| TRTN | Triton International Ltd | 1.84 | 0.62 | 0.23 |
| URI | United Rentals Inc | 0.31 | 1.44 | 1.12 |
| WLFC | Willis Lease Finance Corp | 2.11 | 1.53 | 0.52 |
| Low | High | |
| Unlevered beta | 0.34 | 0.52 |
| Relevered beta | 1.03 | 1.34 |
| Adjusted relevered beta | 1.02 | 1.23 |
CAI'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 CAI:
cost_of_equity (9.05%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.02) + 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.