DBI WACC - Weighted Average Cost of Capital

The WACC of Designer Brands Inc (DBI) is 9.1%.

The Cost of Equity of Designer Brands Inc (DBI) is 7.30%.

The Cost of Debt of Designer Brands Inc (DBI) is 12.10%.

	Range	Selected
Cost of equity	5.90% - 8.70%	7.30%
Tax rate	9.20% - 17.40%	13.30%
Cost of debt	8.60% - 15.60%	12.10%
WACC	7.0% - 11.2%	9.1%

WACC

DBI WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.44	0.68

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	8.70%

Tax rate	9.20%	17.40%
Debt/Equity ratio	1.42	1.42
Cost of debt	8.60%	15.60%

After-tax WACC	7.0%	11.2%


Selected WACC	9.1%

DBI'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 DBI:

cost_of_equity (7.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.44) + 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.