HYFM
Hydrofarm Holdings Group Inc
Price:  
4.37 
USD
Volume:  
12,324.00
United States | Machinery
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HYFM WACC - Weighted Average Cost of Capital

The WACC of Hydrofarm Holdings Group Inc (HYFM) is 25.3%.

The Cost of Equity of Hydrofarm Holdings Group Inc (HYFM) is 20.35%.
The Cost of Debt of Hydrofarm Holdings Group Inc (HYFM) is 27.40%.

Range Selected
Cost of equity 17.40% - 23.30% 20.35%
Tax rate 1.80% - 4.90% 3.35%
Cost of debt 7.00% - 47.80% 27.40%
WACC 8.4% - 42.3% 25.3%
WACC

HYFM WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 2.94 3.3
Additional risk adjustments 0.0% 0.5%
Cost of equity 17.40% 23.30%
Tax rate 1.80% 4.90%
Debt/Equity ratio 5.94 5.94
Cost of debt 7.00% 47.80%
After-tax WACC 8.4% 42.3%
Selected WACC 25.3%

HYFM'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 HYFM:

cost_of_equity (20.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.94) + 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.