FWRD WACC - Weighted Average Cost of Capital
The WACC of Forward Air Corp (FWRD) is 10.6%.
| Range | Selected | |
| Cost of equity | 6.0% - 10.5% | 8.25% |
| Tax rate | 24.2% - 24.7% | 24.45% |
| Cost of debt | 6.2% - 23.9% | 15.05% |
| WACC | 5.0% - 16.3% | 10.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.47 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.0% | 10.5% |
| Tax rate | 24.2% | 24.7% |
| Debt/Equity ratio | 3.47 | 3.47 |
| Cost of debt | 6.2% | 23.9% |
| After-tax WACC | 5.0% | 16.3% |
| Selected WACC | 10.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FWRD | Forward Air Corp | 3.47 | 1.97 | 0.54 |
| AIRT | Air T Inc | 2.29 | -0.11 | -0.04 |
| ATSG | Air Transport Services Group Inc | 1.05 | 0.94 | 0.52 |
| CJT.TO | Cargojet Inc | 0.52 | 1.39 | 0.99 |
| PACC | Pacific CMA Inc | 1.07 | 0.35 | 0.2 |
| RLGT | Radiant Logistics Inc | 0 | 1.02 | 1.01 |
| ALCLA.PA | Clasquin SA | 0.18 | 0.13 | 0.12 |
| CTT.LS | CTT Correios de Portugal SA | 4.8 | 0.42 | 0.09 |
| JETPAK.ST | Jetpak Top Holding AB (publ) | 0.16 | -0.11 | -0.1 |
| MLL.DE | Mueller Die lila Logistik SE | 3.15 | 0.03 | 0.01 |
| Low | High | |
| Unlevered beta | 0.11 | 0.33 |
| Relevered beta | 0.21 | 1.01 |
| Adjusted relevered beta | 0.47 | 1.01 |
FWRD'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 FWRD:
cost_of_equity (8.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.47) + 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.