DORM WACC - Weighted Average Cost of Capital
The WACC of Dorman Products Inc (DORM) is 7.8%.
| Range | Selected | |
| Cost of equity | 7.1% - 9.5% | 8.3% |
| Tax rate | 22.4% - 22.8% | 22.6% |
| Cost of debt | 4.6% - 4.6% | 4.6% |
| WACC | 6.7% - 8.9% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.7 | 0.84 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.1% | 9.5% |
| Tax rate | 22.4% | 22.8% |
| Debt/Equity ratio | 0.12 | 0.12 |
| Cost of debt | 4.6% | 4.6% |
| After-tax WACC | 6.7% | 8.9% |
| Selected WACC | 7.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| DORM | Dorman Products Inc | 0.12 | 0.57 | 0.52 |
| CXDC | China XD Plastics Company Ltd | 8096.65 | 0.99 | 0 |
| FOXF | Fox Factory Holding Corp | 0.6 | 1.25 | 0.86 |
| MPAA | Motorcar Parts of America Inc | 0.53 | 1.42 | 1.01 |
| SHLOQ | Shiloh Industries Inc | 115.01 | 0.65 | 0.01 |
| SMP | Standard Motor Products Inc | 0.77 | 0.73 | 0.46 |
| SRI | Stoneridge Inc | 0.91 | 1.43 | 0.84 |
| SUP | Superior Industries International Inc | 51.11 | -0.13 | 0 |
| THRM | Gentherm Inc | 0.23 | 0.69 | 0.59 |
| XPEL | Xpel Inc | 0 | 1.03 | 1.03 |
| Low | High | |
| Unlevered beta | 0.5 | 0.69 |
| Relevered beta | 0.55 | 0.76 |
| Adjusted relevered beta | 0.7 | 0.84 |
DORM'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 DORM:
cost_of_equity (8.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.7) + 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.