Kellogg WACC - Weighted Average Cost of Capital
The WACC of Kellogg Co (K) is 5.7%.
| Range | Selected | |
| Cost of equity | 5.4% - 6.9% | 6.15% |
| Tax rate | 19.6% - 21.9% | 20.75% |
| Cost of debt | 4.0% - 4.9% | 4.45% |
| WACC | 5.0% - 6.4% | 5.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.34 | 0.36 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.4% | 6.9% |
| Tax rate | 19.6% | 21.9% |
| Debt/Equity ratio | 0.2 | 0.2 |
| Cost of debt | 4.0% | 4.9% |
| After-tax WACC | 5.0% | 6.4% |
| Selected WACC | 5.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| K | Kellogg Co | 0.2 | 0.01 | 0.01 |
| CAG | Conagra Brands Inc | 0.79 | -0.19 | -0.11 |
| CPB | Campbell Soup Co | 0.72 | 0.04 | 0.03 |
| GIS | General Mills Inc | 0.44 | -0.16 | -0.12 |
| HRL | Hormel Foods Corp | 0.18 | 0 | 0 |
| HSY | Hershey Co | 0.16 | -0.15 | -0.13 |
| MKC | McCormick & Company Inc | 0.23 | 0.11 | 0.1 |
| PPC | Pilgrims Pride Corp | 0.27 | 0.21 | 0.17 |
| SAP.TO | Saputo Inc | 0.36 | 0.27 | 0.21 |
| SJM | J M Smucker Co | 0.7 | 0.1 | 0.06 |
| Low | High | |
| Unlevered beta | 0.01 | 0.04 |
| Relevered beta | 0.01 | 0.04 |
| Adjusted relevered beta | 0.34 | 0.36 |
Kellogg'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 Kellogg:
cost_of_equity (6.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.34) + 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.