HII
Huntington Ingalls Industries Inc
Price:  
252.08 
USD
Volume:  
304,186
United States | Aerospace & Defense

HII WACC - Weighted Average Cost of Capital

The WACC of Huntington Ingalls Industries Inc (HII) is 7.2%.

The Cost of Equity of Huntington Ingalls Industries Inc (HII) is 8.45%.
The Cost of Debt of Huntington Ingalls Industries Inc (HII) is 4.45%.

RangeSelected
Cost of equity7.4% - 9.5%8.45%
Tax rate14.3% - 16.5%15.4%
Cost of debt4.0% - 4.9%4.45%
WACC6.4% - 8.1%7.2%
WACC

HII WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.760.83
Additional risk adjustments0.0%0.5%
Cost of equity7.4%9.5%
Tax rate14.3%16.5%
Debt/Equity ratio
0.340.34
Cost of debt4.0%4.9%
After-tax WACC6.4%8.1%
Selected WACC7.2%

HII'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 HII:

cost_of_equity (8.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.76) + 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.