GGG
Graco Inc
Price:  
83.23 
USD
Volume:  
518,061.00
United States | Machinery
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GGG WACC - Weighted Average Cost of Capital

The WACC of Graco Inc (GGG) is 8.7%.

The Cost of Equity of Graco Inc (GGG) is 8.75%.
The Cost of Debt of Graco Inc (GGG) is 5.60%.

Range Selected
Cost of equity 7.60% - 9.90% 8.75%
Tax rate 15.50% - 17.10% 16.30%
Cost of debt 4.50% - 6.70% 5.60%
WACC 7.6% - 9.9% 8.7%
WACC

GGG WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.81 0.9
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 9.90%
Tax rate 15.50% 17.10%
Debt/Equity ratio 0 0
Cost of debt 4.50% 6.70%
After-tax WACC 7.6% 9.9%
Selected WACC 8.7%

GGG'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 GGG:

cost_of_equity (8.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.81) + 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.