FUN WACC - Weighted Average Cost of Capital
The WACC of Cedar Fair LP (FUN) is 6.0%.
| Range | Selected | |
| Cost of equity | 5.5% - 8.7% | 7.1% |
| Tax rate | 24.3% - 44.8% | 34.55% |
| Cost of debt | 7.1% - 9.1% | 8.1% |
| WACC | 5.4% - 6.6% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.35 | 0.69 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.5% | 8.7% |
| Tax rate | 24.3% | 44.8% |
| Debt/Equity ratio | 1.36 | 1.36 |
| Cost of debt | 7.1% | 9.1% |
| After-tax WACC | 5.4% | 6.6% |
| Selected WACC | 6.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FUN | Cedar Fair LP | 1.36 | 1.03 | 0.52 |
| CLUBQ | Town Sports International Holdings Inc | 63244.87 | 1.57 | 0 |
| DS | Drive Shack Inc | 3.99 | 1.45 | 0.37 |
| HOFV | Hall of Fame Resort & Entertainment Co | 44.05 | 0.93 | 0.03 |
| ICE.TO | Canlan Ice Sports Corp | 0.91 | -0.01 | -0.01 |
| PRXIQ | Premier Exhibitions Inc | 11307.69 | -0.95 | 0 |
| SEAS | SeaWorld Entertainment Inc | 0.66 | 1.4 | 0.95 |
| SIX | Six Flags Entertainment Corp | 0.88 | 1.94 | 1.19 |
| TWC.TO | TWC Enterprises Ltd | 0.07 | 0.22 | 0.21 |
| TIV.CO | Tivoli A/S | 0.09 | -0.01 | -0.01 |
| Low | High | |
| Unlevered beta | 0.02 | 0.27 |
| Relevered beta | 0.03 | 0.54 |
| Adjusted relevered beta | 0.35 | 0.69 |
FUN'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 FUN:
cost_of_equity (7.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.35) + 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.