CHEF
Chefs' Warehouse Inc
Price:  
65.76 
USD
Volume:  
316,109
United States | Food & Staples Retailing

CHEF WACC - Weighted Average Cost of Capital

The WACC of Chefs' Warehouse Inc (CHEF) is 6.6%.

The Cost of Equity of Chefs' Warehouse Inc (CHEF) is 7.2%.
The Cost of Debt of Chefs' Warehouse Inc (CHEF) is 5.9%.

RangeSelected
Cost of equity6.2% - 8.2%7.2%
Tax rate31.9% - 33.2%32.55%
Cost of debt5.7% - 6.1%5.9%
WACC5.7% - 7.4%6.6%
WACC

CHEF WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.520.6
Additional risk adjustments0.0%0.5%
Cost of equity6.2%8.2%
Tax rate31.9%33.2%
Debt/Equity ratio
0.270.27
Cost of debt5.7%6.1%
After-tax WACC5.7%7.4%
Selected WACC6.6%

CHEF'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 CHEF:

cost_of_equity (7.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.52) + 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.