DIT WACC - Weighted Average Cost of Capital
The WACC of AMCON Distributing Co (DIT) is 6.3%.
| Range | Selected | |
| Cost of equity | 5.5% - 8.1% | 6.8% |
| Tax rate | 29.5% - 31.3% | 30.4% |
| Cost of debt | 5.3% - 12.4% | 8.85% |
| WACC | 4.3% - 8.4% | 6.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.35 | 0.57 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.5% | 8.1% |
| Tax rate | 29.5% | 31.3% |
| Debt/Equity ratio | 1.91 | 1.91 |
| Cost of debt | 5.3% | 12.4% |
| After-tax WACC | 4.3% | 8.4% |
| Selected WACC | 6.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| DIT | AMCON Distributing Co | 1.91 | 0.14 | 0.06 |
| BMXC | Bemax Inc | 473297 | -1.74 | 0 |
| CORE | Core-Mark Holding Company Inc | 0.19 | 0.37 | 0.33 |
| EDUC | Educational Development Corp | 2.91 | 0.05 | 0.02 |
| LKQ | LKQ Corp | 0.43 | 0.38 | 0.29 |
| POOL | Pool Corp | 0.09 | 0.48 | 0.45 |
| TCOR | TreeCon Resources Inc | 1.51 | -0.05 | -0.03 |
| UFMG | Universal Mfg Co | 1.2 | 1.34 | 0.73 |
| UNS.TO | Uni-Select Inc | 0.22 | 0.74 | 0.64 |
| BSGR.AS | B&S Group SA | 0.85 | -1.22 | -0.76 |
| Low | High | |
| Unlevered beta | 0.04 | 0.31 |
| Relevered beta | 0.03 | 0.36 |
| Adjusted relevered beta | 0.35 | 0.57 |
DIT'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 DIT:
cost_of_equity (6.80%) = 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.