The WACC of Insteel Industries Inc (IIIN) is 6.1%.
Range | Selected | |
Cost of equity | 7.0% - 9.7% | 8.35% |
Tax rate | 22.5% - 22.7% | 22.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.4% - 6.8% | 6.1% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.68 | 0.86 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.0% | 9.7% |
Tax rate | 22.5% | 22.7% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.4% | 6.8% |
Selected WACC | 6.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
IIIN | Insteel Industries Inc | 0.91 | 1.25 | 0.74 |
AEHL | Antelope Enterprise Holdings Ltd | 0.12 | -0.16 | -0.15 |
AUVI | Applied UV Inc | 3.79 | 1.2 | 0.31 |
BURCA | Burnham Holdings Inc | 0.25 | 0.26 | 0.21 |
CSTE | Caesarstone Ltd | 0.09 | 0.75 | 0.7 |
CSWI | CSW Industrials Inc | 0.03 | 1.75 | 1.71 |
IVX.V | Inventronics Ltd | 1.11 | 0.53 | 0.29 |
JELD | JELD-WEN Holding Inc | 3.8 | 0.64 | 0.16 |
NX | Quanex Building Products Corp | 0.97 | 0.74 | 0.43 |
PFB.TO | PFB Corporation | 0.1 | 0.52 | 0.49 |
PGTI | PGT Innovations Inc | 0.25 | 1.15 | 0.96 |
Low | High | |
Unlevered beta | 0.31 | 0.49 |
Relevered beta | 0.52 | 0.79 |
Adjusted relevered beta | 0.68 | 0.86 |
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 IIIN:
cost_of_equity (8.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.68) + 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.