KFY WACC - Weighted Average Cost of Capital
The WACC of Korn Ferry (KFY) is 7.1%.
| Range | Selected | |
| Cost of equity | 6.3% - 8.7% | 7.5% |
| Tax rate | 26.2% - 28.4% | 27.3% |
| Cost of debt | 4.5% - 6.3% | 5.4% |
| WACC | 6.0% - 8.3% | 7.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.54 | 0.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.3% | 8.7% |
| Tax rate | 26.2% | 28.4% |
| Debt/Equity ratio | 0.11 | 0.11 |
| Cost of debt | 4.5% | 6.3% |
| After-tax WACC | 6.0% | 8.3% |
| Selected WACC | 7.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| KFY | Korn Ferry | 0.11 | 1 | 0.92 |
| BGSF | BGSF Inc | 1 | 0.39 | 0.23 |
| CTPR | CTPartners Executive Search Inc | 1.1 | 0.02 | 0.01 |
| CWL.TO | Caldwell Partners International Inc | 0.31 | -0.62 | -0.51 |
| HQI | Hirequest Inc | 0.05 | 0.47 | 0.45 |
| JOB | GEE Group Inc | 0.01 | 0.54 | 0.54 |
| KFRC | Kforce Inc | 0.04 | 0.33 | 0.32 |
| STJO | St Joseph Inc | 0.17 | -1.05 | -0.94 |
| TBI | TrueBlue Inc | 0.05 | 0.69 | 0.66 |
| TNET | TriNet Group Inc | 0.24 | 0.89 | 0.76 |
| Low | High | |
| Unlevered beta | 0.29 | 0.48 |
| Relevered beta | 0.31 | 0.52 |
| Adjusted relevered beta | 0.54 | 0.68 |
KFY'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 KFY:
cost_of_equity (7.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.54) + 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.