FF WACC - Weighted Average Cost of Capital
The WACC of FutureFuel Corp (FF) is 7.6%.
| Range | Selected | |
| Cost of equity | 9.1% - 13.1% | 11.1% |
| Tax rate | 8.5% - 25.2% | 16.85% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.8% - 8.4% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.14 | 1.47 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.1% | 13.1% |
| Tax rate | 8.5% | 25.2% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.8% | 8.4% |
| Selected WACC | 7.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FF | FutureFuel Corp | 1.02 | 1.21 | 0.64 |
| ABLT | American Biltrite Inc | 6.98 | 0.67 | 0.09 |
| ADES | Advanced Emissions Solutions Inc | 0.04 | 0.6 | 0.58 |
| CCF | Chase Corp | 0.15 | 0.7 | 0.61 |
| FTK | Flotek Industries Inc | 0.01 | 1.94 | 1.92 |
| IKNX | Ikonics Corp | 0.04 | 0.99 | 0.95 |
| LTHM | Livent Corp | 0.08 | 1.78 | 1.66 |
| NANX | Nanophase Technologies Corp | 0.09 | 0.92 | 0.85 |
| NNO.V | Nano One Materials Corp | 0 | 1.78 | 1.78 |
| NTIC | Northern Technologies International Corp | 0.1 | -0.02 | -0.01 |
| VNP.TO | 5N Plus Inc | 0.29 | 0.83 | 0.66 |
| Low | High | |
| Unlevered beta | 0.64 | 0.85 |
| Relevered beta | 1.21 | 1.7 |
| Adjusted relevered beta | 1.14 | 1.47 |
FF'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 FF:
cost_of_equity (11.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.14) + 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.