DRVN
Driven Brands Holdings Inc
Price:  
17.45 
USD
Volume:  
648,622.00
United States | Commercial Services & Supplies
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DRVN WACC - Weighted Average Cost of Capital

The WACC of Driven Brands Holdings Inc (DRVN) is 6.4%.

The Cost of Equity of Driven Brands Holdings Inc (DRVN) is 7.55%.
The Cost of Debt of Driven Brands Holdings Inc (DRVN) is 6.95%.

Range Selected
Cost of equity 5.90% - 9.20% 7.55%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 4.80% - 9.10% 6.95%
WACC 4.7% - 8.0% 6.4%
WACC

DRVN 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 0.78
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.90% 9.20%
Tax rate 26.20% 27.00%
Debt/Equity ratio 0.94 0.94
Cost of debt 4.80% 9.10%
After-tax WACC 4.7% 8.0%
Selected WACC 6.4%

DRVN'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 DRVN:

cost_of_equity (7.55%) = 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.