FBHS WACC - Weighted Average Cost of Capital
The WACC of Fortune Brands Home & Security Inc (FBHS) is 9.8%.
| Range | Selected | |
| Cost of equity | 10.5% - 13.3% | 11.9% |
| Tax rate | 21.6% - 22.3% | 21.95% |
| Cost of debt | 4.0% - 5.3% | 4.65% |
| WACC | 8.6% - 11.0% | 9.8% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 1.26 | 1.35 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.5% | 13.3% |
| Tax rate | 21.6% | 22.3% |
| Debt/Equity ratio | 0.34 | 0.34 |
| Cost of debt | 4.0% | 5.3% |
| After-tax WACC | 8.6% | 11.0% |
| Selected WACC | 9.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FBHS | Fortune Brands Home & Security Inc | 0.34 | 1.57 | 1.24 |
| AOS | A. O. Smith Corp | 0.02 | 0.75 | 0.74 |
| BLDR | Builders FirstSource Inc | 0.26 | 1 | 0.83 |
| CNR | Core Natural Resources, Inc. | 0.05 | 1.48 | 1.42 |
| DOOR | Masonite International Corp | 0.38 | 1.54 | 1.19 |
| JELD | JELD-WEN Holding Inc | 3.12 | 0.82 | 0.24 |
| LII | Lennox International Inc | 0.05 | 0.88 | 0.85 |
| MAS | Masco Corp | 0.21 | 0.9 | 0.77 |
| OC | Owens Corning | 0.42 | 1.22 | 0.92 |
| UFPI | Ufp Industries Inc | 0.04 | 0.81 | 0.78 |
| Low | High | |
| Unlevered beta | 0.81 | 0.88 |
| Relevered beta | 1.39 | 1.52 |
| Adjusted relevered beta | 1.26 | 1.35 |
FBHS'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 FBHS:
cost_of_equity (11.90%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (1.26) + 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.