GHM
Graham Corp
Price:  
39.43 
USD
Volume:  
67,226.00
United States | Machinery
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GHM WACC - Weighted Average Cost of Capital

The WACC of Graham Corp (GHM) is 7.8%.

The Cost of Equity of Graham Corp (GHM) is 7.80%.
The Cost of Debt of Graham Corp (GHM) is 57.55%.

Range Selected
Cost of equity 6.10% - 9.50% 7.80%
Tax rate 20.20% - 23.80% 22.00%
Cost of debt 4.50% - 110.60% 57.55%
WACC 6.1% - 9.5% 7.8%
WACC

GHM WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.49 0.83
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.10% 9.50%
Tax rate 20.20% 23.80%
Debt/Equity ratio 0 0
Cost of debt 4.50% 110.60%
After-tax WACC 6.1% 9.5%
Selected WACC 7.8%

GHM'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 GHM:

cost_of_equity (7.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.49) + 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.