Kohls WACC - Weighted Average Cost of Capital
The WACC of Kohls Corp (KSS) is 7.3%.
| Range | Selected | |
| Cost of equity | 12.2% - 18.5% | 15.35% |
| Tax rate | 19.8% - 40.7% | 30.25% |
| Cost of debt | 6.7% - 9.1% | 7.9% |
| WACC | 6.7% - 8.0% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.82 | 2.44 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.2% | 18.5% |
| Tax rate | 19.8% | 40.7% |
| Debt/Equity ratio | 4.09 | 4.09 |
| Cost of debt | 6.7% | 9.1% |
| After-tax WACC | 6.7% | 8.0% |
| Selected WACC | 7.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| KSS | Kohls Corp | 4.09 | 1.38 | 0.33 |
| AN | AutoNation Inc | 0.57 | 0.93 | 0.64 |
| CTC.A.TO | Canadian Tire Corporation Ltd | 0.76 | 0.59 | 0.37 |
| DDS | Dillard's Inc | 0.08 | 1.13 | 1.07 |
| GPS | Gap Inc | 0.16 | 1.43 | 1.27 |
| JWN | Nordstrom Inc | 0.63 | 0.26 | 0.18 |
| LB | L Brands Inc | 0.08 | 2.02 | 1.9 |
| M | Macy's Inc | 0.8 | 1.19 | 0.74 |
| OLLI | Ollie's Bargain Outlet Holdings Inc | 0 | 0.79 | 0.79 |
| SHLDQ | Sears Holdings Corp | 547.02 | -0.66 | 0 |
| Low | High | |
| Unlevered beta | 0.53 | 0.76 |
| Relevered beta | 2.22 | 3.15 |
| Adjusted relevered beta | 1.82 | 2.44 |
Kohls'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 Kohls:
cost_of_equity (15.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.82) + 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.