HII
Huntington Ingalls Industries Inc
Price:  
230.02 
USD
Volume:  
667,949.00
United States | Aerospace & Defense
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HII WACC - Weighted Average Cost of Capital

The WACC of Huntington Ingalls Industries Inc (HII) is 7.5%.

The Cost of Equity of Huntington Ingalls Industries Inc (HII) is 8.80%.
The Cost of Debt of Huntington Ingalls Industries Inc (HII) is 4.45%.

Range Selected
Cost of equity 7.30% - 10.30% 8.80%
Tax rate 14.30% - 16.50% 15.40%
Cost of debt 4.00% - 4.90% 4.45%
WACC 6.3% - 8.7% 7.5%
WACC

HII WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.74 0.98
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.30% 10.30%
Tax rate 14.30% 16.50%
Debt/Equity ratio 0.35 0.35
Cost of debt 4.00% 4.90%
After-tax WACC 6.3% 8.7%
Selected WACC 7.5%

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 (8.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.74) + 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.