DBI WACC - Weighted Average Cost of Capital

The WACC of Designer Brands Inc (DBI) is 8.4%.

The Cost of Equity of Designer Brands Inc (DBI) is 7.60%.

The Cost of Debt of Designer Brands Inc (DBI) is 10.50%.

	Range	Selected
Cost of equity	6.10% - 9.10%	7.60%
Tax rate	9.20% - 17.40%	13.30%
Cost of debt	8.60% - 12.40%	10.50%
WACC	7.0% - 9.7%	8.4%

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	0.49	0.76

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.10%	9.10%

Tax rate	9.20%	17.40%
Debt/Equity ratio	1.13	1.13
Cost of debt	8.60%	12.40%

After-tax WACC	7.0%	9.7%


Selected WACC	8.4%

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 (7.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.49) + 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.