Gentex WACC - Weighted Average Cost of Capital
The WACC of Gentex Corp (GNTX) is 6.8%.
| Range | Selected | |
| Cost of equity | 8.2% - 10.4% | 9.3% |
| Tax rate | 14.1% - 14.7% | 14.4% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.2% - 7.3% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.93 | 0.99 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.2% | 10.4% |
| Tax rate | 14.1% | 14.7% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.2% | 7.3% |
| Selected WACC | 6.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| GNTX | Gentex Corp | 0.81 | 0.37 | 0.22 |
| CPS | Cooper-Standard Holdings Inc | 2.85 | 1.62 | 0.47 |
| CXDC | China XD Plastics Company Ltd | 8096.65 | 0.99 | 0 |
| FOXF | Fox Factory Holding Corp | 0.7 | 1.16 | 0.72 |
| LCII | LCI Industries | 0.34 | 0.86 | 0.66 |
| MRE.TO | Martinrea International Inc | 2.1 | 1.43 | 0.51 |
| PATK | Patrick Industries Inc | 0.46 | 1.06 | 0.76 |
| SMP | Standard Motor Products Inc | 0.86 | 0.68 | 0.39 |
| SRI | Stoneridge Inc | 1.52 | 1.28 | 0.56 |
| SUP | Superior Industries International Inc | 34.06 | -0.22 | -0.01 |
| THRM | Gentherm Inc | 0.27 | 0.61 | 0.5 |
| Low | High | |
| Unlevered beta | 0.47 | 0.51 |
| Relevered beta | 0.9 | 0.99 |
| Adjusted relevered beta | 0.93 | 0.99 |
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 (9.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.93) + 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.