HEI
HEICO Corp
Price:  
323.51 
USD
Volume:  
292,424.00
United States | Aerospace & Defense
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Heico WACC - Weighted Average Cost of Capital

The WACC of HEICO Corp (HEI) is 8.7%.

The Cost of Equity of HEICO Corp (HEI) is 8.90%.
The Cost of Debt of HEICO Corp (HEI) is 5.95%.

Range Selected
Cost of equity 7.60% - 10.20% 8.90%
Tax rate 16.40% - 18.50% 17.45%
Cost of debt 4.90% - 7.00% 5.95%
WACC 7.4% - 10.0% 8.7%
WACC

Heico WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.81 0.96
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 10.20%
Tax rate 16.40% 18.50%
Debt/Equity ratio 0.05 0.05
Cost of debt 4.90% 7.00%
After-tax WACC 7.4% 10.0%
Selected WACC 8.7%

Heico'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 Heico:

cost_of_equity (8.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.81) + 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.