DLTH WACC - Weighted Average Cost of Capital
The WACC of Duluth Holdings Inc (DLTH) is 8.5%.
| Range | Selected | |
| Cost of equity | 9.8% - 13.6% | 11.7% |
| Tax rate | 22.9% - 24.1% | 23.5% |
| Cost of debt | 5.4% - 7.0% | 6.2% |
| WACC | 7.2% - 9.8% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.29 | 1.56 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.8% | 13.6% |
| Tax rate | 22.9% | 24.1% |
| Debt/Equity ratio | 0.86 | 0.86 |
| Cost of debt | 5.4% | 7.0% |
| After-tax WACC | 7.2% | 9.8% |
| Selected WACC | 8.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| DLTH | Duluth Holdings Inc | 0.86 | 0.66 | 0.4 |
| AMZN | Amazon.com Inc | 0.03 | 1.36 | 1.32 |
| FOOD.TO | Goodfood Market Corp | 4.33 | 1.5 | 0.35 |
| KITS.TO | Kits Eyecare Ltd | 0.03 | 1.07 | 1.04 |
| LEJU | Leju Holdings Ltd | 0.05 | 1.56 | 1.5 |
| MOHO | Ecmoho Ltd | 1.23 | 0.93 | 0.48 |
| PRTS | Carparts.Com Inc | 0.27 | 0.73 | 0.61 |
| PTS.TO | Points International Ltd | 0 | 1.62 | 1.62 |
| REAL | RealReal Inc | 0.71 | 1.8 | 1.17 |
| RUHN | Ruhnn Holding Ltd | 0.01 | 1.07 | 1.07 |
| Low | High | |
| Unlevered beta | 0.87 | 1.11 |
| Relevered beta | 1.43 | 1.84 |
| Adjusted relevered beta | 1.29 | 1.56 |
DLTH'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 DLTH:
cost_of_equity (11.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.29) + 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.