GNTX
Gentex Corp
Price:  
21.78 
USD
Volume:  
1,857,899.00
United States | Auto Components
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Gentex WACC - Weighted Average Cost of Capital

The WACC of Gentex Corp (GNTX) is 6.8%.

The Cost of Equity of Gentex Corp (GNTX) is 9.30%.
The Cost of Debt of Gentex Corp (GNTX) is 5.00%.

Range Selected
Cost of equity 8.20% - 10.40% 9.30%
Tax rate 14.10% - 14.70% 14.40%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.2% - 7.3% 6.8%
WACC

Gentex WACC calculation

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 8.20% 10.40%
Tax rate 14.10% 14.70%
Debt/Equity ratio 1 1
Cost of debt 5.00% 5.00%
After-tax WACC 6.2% 7.3%
Selected WACC 6.8%

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.