Gentex WACC - Weighted Average Cost of Capital
The WACC of Gentex Corp (GNTX) is 7.1%.
| Range | Selected | |
| Cost of equity | 8.5% - 11.2% | 9.85% |
| Tax rate | 14.1% - 14.7% | 14.4% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.4% - 7.7% | 7.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.01 | 1.13 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.5% | 11.2% |
| Tax rate | 14.1% | 14.7% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.4% | 7.7% |
| Selected WACC | 7.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| GNTX | Gentex Corp | 1.13 | 0.45 | 0.23 |
| CPS | Cooper-Standard Holdings Inc | 2.61 | 1.71 | 0.53 |
| CXDC | China XD Plastics Company Ltd | 8096.65 | 0.99 | 0 |
| FOXF | Fox Factory Holding Corp | 0.6 | 1.25 | 0.83 |
| LCII | LCI Industries | 0.31 | 0.93 | 0.73 |
| MRE.TO | Martinrea International Inc | 1.93 | 1.5 | 0.56 |
| PATK | Patrick Industries Inc | 0.4 | 1.11 | 0.83 |
| SMP | Standard Motor Products Inc | 0.77 | 0.73 | 0.44 |
| SRI | Stoneridge Inc | 0.91 | 1.43 | 0.81 |
| SUP | Superior Industries International Inc | 51.11 | -0.13 | 0 |
| THRM | Gentherm Inc | 0.23 | 0.69 | 0.58 |
| Low | High | |
| Unlevered beta | 0.53 | 0.58 |
| Relevered beta | 1.01 | 1.19 |
| Adjusted relevered beta | 1.01 | 1.13 |
Gentex'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 Gentex:
cost_of_equity (9.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.01) + 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.