LECO
Lincoln Electric Holdings Inc
Price:  
224.08 
USD
Volume:  
235,537.00
United States | Machinery
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LECO WACC - Weighted Average Cost of Capital

The WACC of Lincoln Electric Holdings Inc (LECO) is 9.9%.

The Cost of Equity of Lincoln Electric Holdings Inc (LECO) is 10.55%.
The Cost of Debt of Lincoln Electric Holdings Inc (LECO) is 4.25%.

Range Selected
Cost of equity 9.30% - 11.80% 10.55%
Tax rate 20.50% - 21.00% 20.75%
Cost of debt 4.00% - 4.50% 4.25%
WACC 8.7% - 11.0% 9.9%
WACC

LECO WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.18 1.24
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.30% 11.80%
Tax rate 20.50% 21.00%
Debt/Equity ratio 0.1 0.1
Cost of debt 4.00% 4.50%
After-tax WACC 8.7% 11.0%
Selected WACC 9.9%

LECO'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 LECO:

cost_of_equity (10.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.18) + 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.