GNRC
Generac Holdings Inc
Price:  
114.56 
USD
Volume:  
1,090,031.00
United States | Electrical Equipment
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GNRC WACC - Weighted Average Cost of Capital

The WACC of Generac Holdings Inc (GNRC) is 8.8%.

The Cost of Equity of Generac Holdings Inc (GNRC) is 9.75%.
The Cost of Debt of Generac Holdings Inc (GNRC) is 4.90%.

Range Selected
Cost of equity 8.60% - 10.90% 9.75%
Tax rate 21.10% - 22.30% 21.70%
Cost of debt 4.90% - 4.90% 4.90%
WACC 7.8% - 9.8% 8.8%
WACC

GNRC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.03 1.09
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.60% 10.90%
Tax rate 21.10% 22.30%
Debt/Equity ratio 0.2 0.2
Cost of debt 4.90% 4.90%
After-tax WACC 7.8% 9.8%
Selected WACC 8.8%

GNRC'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 GNRC:

cost_of_equity (9.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.03) + 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.