Clorox WACC - Weighted Average Cost of Capital
The WACC of Clorox Co (CLX) is 5.9%.
| Range | Selected | |
| Cost of equity | 5.5% - 7.1% | 6.3% |
| Tax rate | 21.7% - 24.1% | 22.9% |
| Cost of debt | 4.0% - 4.6% | 4.3% |
| WACC | 5.2% - 6.6% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.35 | 0.4 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.5% | 7.1% |
| Tax rate | 21.7% | 24.1% |
| Debt/Equity ratio | 0.16 | 0.16 |
| Cost of debt | 4.0% | 4.6% |
| After-tax WACC | 5.2% | 6.6% |
| Selected WACC | 5.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CLX | Clorox Co | 0.16 | 0.05 | 0.04 |
| CENT | Central Garden & Pet Co | 0.51 | 0.29 | 0.21 |
| CHD | Church & Dwight Co Inc | 0.09 | 0.02 | 0.02 |
| ENR | Energizer Holdings Inc | 1.94 | 0.34 | 0.14 |
| KMB | Kimberly-Clark Corp | 0.16 | 0.07 | 0.06 |
| OBCI | Ocean Bio-Chem Inc | 0.07 | -0.24 | -0.23 |
| ODC | Oil-Dri Corporation of America | 0.07 | 0.37 | 0.35 |
| PURE | PURE Biosciences Inc | 0.2 | -0.55 | -0.48 |
| SPB | Spectrum Brands Holdings Inc | 0.37 | 0.81 | 0.63 |
| WDFC | WD-40 Co | 0.03 | -0.08 | -0.08 |
| Low | High | |
| Unlevered beta | 0.03 | 0.09 |
| Relevered beta | 0.03 | 0.1 |
| Adjusted relevered beta | 0.35 | 0.4 |
Clorox'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 Clorox:
cost_of_equity (6.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.35) + 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.