CTOS WACC - Weighted Average Cost of Capital
The WACC of Custom Truck One Source Inc (CTOS) is 12.7%.
| Range | Selected | |
| Cost of equity | 10.5% - 13.2% | 11.85% |
| Tax rate | 8.6% - 14.3% | 11.45% |
| Cost of debt | 9.5% - 20.9% | 15.2% |
| WACC | 9.4% - 15.9% | 12.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.44 | 1.49 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.5% | 13.2% |
| Tax rate | 8.6% | 14.3% |
| Debt/Equity ratio | 1.43 | 1.43 |
| Cost of debt | 9.5% | 20.9% |
| After-tax WACC | 9.4% | 15.9% |
| Selected WACC | 12.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CTOS | Custom Truck One Source Inc | 1.43 | 1.54 | 0.69 |
| BECN | Beacon Roofing Supply Inc | 0.37 | 0.93 | 0.71 |
| FAST | Fastenal Co | 0 | 0.59 | 0.59 |
| GWW | W W Grainger Inc | 0.05 | 0.74 | 0.71 |
| MSM | MSC Industrial Direct Co Inc | 0.11 | 0.83 | 0.76 |
| SITE | SiteOne Landscape Supply Inc | 0.09 | 1.08 | 1 |
| UNVR | Univar Solutions Inc | 0.4 | 1.02 | 0.76 |
| URI | United Rentals Inc | 0.28 | 1.42 | 1.14 |
| WCC | Wesco International Inc | 0.6 | 1.57 | 1.03 |
| WSO | Watsco Inc | 0 | 0.78 | 0.78 |
| Low | High | |
| Unlevered beta | 0.74 | 0.77 |
| Relevered beta | 1.66 | 1.73 |
| Adjusted relevered beta | 1.44 | 1.49 |
CTOS'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 CTOS:
cost_of_equity (11.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.44) + 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.